You can get a mortgage after your IVA. However your options will depend on when the Arrangement started and whether the record is still on your credit file.
Included in this article:
- When is it possible to get a mortgage after an IVA?
- How much will the mortgage cost?
- How much will you be able to borrow?
- Can you get a mortgage during an IVA?
Finished your IVA and want to get a mortgage? Give us a call (0800 077 6180) or complete the form below. The advice is free and confidential
When is it possible to get a Mortgage after an IVA?
Your options for getting a mortgage after your IVA will depend on whether the record is still showing on your credit file. Regardless of when the Arrangement was completed (early or otherwise) the record remains for 6 years from the START DATE.
If the record is no longer on your file there are one or two high street lenders who may offer you a mortgage at competitive interest rates. However most high street lenders will not be prepared to help. It is therefore advisable to get assistance from a specialist broker.
Where your IVA is still showing on your credit file your mortgage options are very limited. A sub prime lender might consider you but only if there was a specific reason for you starting your IVA. For example if you were made redundant or suffered a period of illness.
You may now be able to get a mortgage after settling early even if the record is still on your file. However the settlement must have taken place at least 3 years ago.
Struggling to get your head round all of this? We can help. Call us (0800 077 6180) or complete the form below. The advice is free and confidential.
What will a Mortgage after your IVA cost?
The cost of a mortgage is determined by the interest rate you have to pay on the money you borrow. The rate you are offered is largely dependent on the status of your credit file.
If the record of your IVA is no longer on your file then with specialist help you should be able to get a mortgage with a High Street lender. This means the rate you will be charged is no different to anyone else. It will be a standard high street rate.
Where you are considering using a sub prime lender because the record is still on your file you must expect to be charged a much higher rate of interest. At the time of writing these types of lenders are offering rates of around 7-9% over the base rate.
To access the lowest possible mortgage interest rates you should wait until the record of your IVA has come off your credit file before applying for a mortgage.
How much will you be able to borrow?
The main factor dictating the size of mortgage you will be able to borrow is your income. Generally speaking lenders will be reluctant to offer more that 4 times your gross annual income. If you want to buy in joint names it will be 4 x the total of your joint gross incomes.
You will also need a deposit. The amount required depends on the type of mortgage lender. If the record of your IVA is no longer on your credit file a high street lender may be prepared accept a deposit of as little as 5-10% of the property value.
It is not possible to borrow as much from a sub prime lender. They are only likely to offer up to 75% of the value of the property. In other words you will need a 25% deposit.
6 or more years after the start date of your IVA you might be able to get a mortgage with a deposit of as little as 5% value of a property.
Can you get a Mortgage if you are still in your IVA?
Generally speaking it is not possible to get a mortgage for the purposes of buying a new property during an IVA. However if you are already a home owner you might be able to remortgage to settle the Arrangement early.
By remortgaging you could release equity from your current property and use this as a lump sum to pay off the IVA. However the amount you can borrow is restricted.
If you have been the Arrangement for less than 2 years you could borrow up to 75% of the value of your property. If it has been over 2 years this could increase to 85%.
The amount you will need to raise to settle an IVA early will normally have to be the equivalent of the total remaining payments less a small discount.
Want help with getting a mortgage now you have completed your IVA? Give us a call (0800 077 6180) or complete the form below.
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i have paid off my iva but it wont be my 6 year until next year… would i be able to get a shared ownership?
Hi Nathalie
Unfortunately, it is not possible to get a mortgage for a shared ownership property until the record of your IVA has been taken off your credit file. As such you will need to wait until next year I’m afraid.
I’m 52 months into my iva, can I settle my iva early?
Hi Tracy
The answer is yes, it should be possible to settle your IVA early if you wish. You can find out more information about how to do this here: How to settle your IVA early
Remember, if you do settle early, the record that your IVA existed will remain on your credit file for the full 6 years. So settling will not normally improve your chances of getting a mortgage any faster.
hi my father is looking to settle my IVA, which in Feburary 2024 will be three years old. How soon after this being settled would I be able to sell my home and buy another?
Hi Natasha
Even if your Father helps you to settle your IVA early, the record of the IVA will remain on your credit file for the full 6 years. So, if it the Arrangement started in Feb 21, the record will not disappear until Feb 27.
This means Feb 27 is a key date for you because this is the first time you will be able to get a new mortgage with a high street lender.
You can consider getting a mortgage at any time after your IVA is completed, However, before the record has come off your file, you would be restricted to considering an expensive sub prime lender.