You can get a mortgage after your IVA. However your options will depend on when the Arrangement started and your financial circumstances.
- 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 to speak to one of our experts
Is it possible to 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 if you have even been in an IVA in the past. If you have they may not want to lend to you.
Despite this there are lenders who will consider you. If you are planning to make an application within 6 years of starting your Arrangement these are likely to be Sub Prime lenders. They offer mortgages to people with poor credit histories.
If the start date of your IVA was more than 6 years ago there may now be High Street lenders who will offer you a mortgage.
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 a Sub Prime lender will charge a higher rate of interest because of the perceived increased risk of lending to you. At the time of writing these types of lenders are offering rates of around 7-8% over the base rate.
If your IVA finished 6 or more years ago it might be possible for you to get a mortgage with a High Street lender. If so could get a much lower interest rate (perhaps as low as 3% over base).
However long it is since you started your IVA you are likely to have greater success in applying for a mortgage if you go through a specialist mortgage broker.
Want to speak to a mortgage broker about your options for getting a mortgage? Give us a call (0800 077 6180) or complete the form below and we will introduce you to a specialist.
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 4 times your gross income. If you are looking to buy in joint names with someone else the maximum you will be able to borrow is normally 4 x the total of your joint gross incomes.
You will also need a deposit. The amount required depends the length of time since your IVA started. If you are applying 3-6 years from the start date you are likely to have to put down at least 25% of the value of the property.
If it is 6 or more years since the start date of your IVA there may be a lender who will offer you a mortgage with a deposit of just 5%.
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.
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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