If you have completed your IVA you may now be thinking about applying for a mortgage. Depending on how long ago you started the Arrangement and your financial circumstances this may now be possible.
- You are in the right place if you want to apply for a mortgage after your IVA
- How much will the mortgage cost?
- How much will you be able to borrow?
- We can put you in contact with a mortgage broker who can help
Finished your IVA and want to get a mortgage? Give us a call (0800 077 6180) or complete the form below to speak to one of our experts
Can you get a Mortgage after your IVA?
The main issue with getting a mortgage after your IVA is your credit rating. It is likely that this will still be affected unless you finished the Arrangement a number of years ago.
Even if your credit rating has started to improve many lenders will still ask whether if you have even been in an IVA in the past. If you have they may not want to lend to you.
However there are lenders who are prepared to offer you a mortgage. These are commonly known as adverse lenders. They lend to people despite their poor credit history.
If your IVA started it more than 6 years ago the record should now have come off your credit file. As a result you now have the best chance of getting a mortgage with a deposit of as little as 5%.
What will a Mortgage after your IVA cost?
The cost of a mortgage is measure by the interest rate you will have to pay on the money you borrow. The interest rate offered by different lenders will vary depending on lots of different factors.
Generally speaking adverse lenders will charge a higher rate of interest because of the perceived increased risk of lending to you. However the rates improve the longer you are prepared to wait.
If you want to get a mortgage after your IVA and it is less than 6 years since the arrangement started you might be offered a rate of 7-8% over base rate. However if your IVA finished 3 or more years ago you could get a rate of 3% over base.
It is sensible to use a mortgage broker who specialises in working with people who have been through an IVA. However you must expect to pay a Broker’s Fee of between £500-£1500 if you get a mortgage.
How much will you be able to borrow?
The main factor dictating how much you will be able to borrow is your income. Obviously the more you earn the more you are likely to be able to borrow.
Generally speaking you will be looking at a multiple of 3 or 4 times your gross income. However the multiples may increase if your earnings are higher.
You will also need a deposit. The amount will depend the length of time since your IVA started. If this within the last 6 years you may need as much as 25% of the value of the property. After 6 years this falls dramatically.
If the record of your IVA is no longer on your credit file you may only need a deposit of 5% of the value of the property you want to buy.
Can you get a mortgage if you are still in your IVA?
If you own your home you may be wondering whether you can try to release equity from your property to settle your IVA early. Depending on the amount of equity you have this might be possible.
If you have been in your IVA for less than 2 years you could borrow up to 75% of the value of your property to settle the Arrangement early. If it has been over 2 years this could increase to 85%.
It may not be possible to find a lender who will allow you to remortgage. However there might well be a secured loan lender who will offer to lend you the extra cash you need if it is specifically to settle your IVA
Your home may be repossessed if you do not keep up repayments on your Mortgage or other loans secured upon it.
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