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Mortgage after an IVA

Getting a mortgage after an IVA (Individual Voluntary Arrangement) has finished may seem difficult, but is certainly possible. Although an IVA will remain on your credit report for 6 years; that’s not to say that you won’t be able to get a mortgage in this time. Some lenders will review an application the day after your IVA has ended.

In this article, we discuss getting a mortgage after an IVA, how to get a mortgage after an IVA and the best way to achieve this and aspects of an IVA.

Speak to us today about your situation and we can advise on the right path for getting a Mortgage after an IVA.

It’s probably fairly obvious that getting a mortgage after an IVA will be more difficult than with a clean credit report. What isn’t so obvious; however, are the steps you can take to give yourself the best chance of being approved. Here are some of the ways you can do to get a mortgage once you’ve been in an IVA:

How to get a mortgage after an IVA

Knowing about what an IVA is and whether you can get a mortgage after one, you may be wondering how to go about getting a mortgage after an IVA. Here’s a general guideline of what you should look at to apply for a mortgage after an IVA.

Contact a specialist mortgage broker

Lenders will still want you to disclose a previous IVA when you apply for a mortgage, going to a specialist broker can help you find out which lenders are likely to accept you, and give you a scope of the rates and products available after an IVA. It’s important to go to a specialist broker if you choose to go to one, as it’s likely you’ll need a specialist lender, not a usual high-street lender. At Clever Mortgages we have access to 8 specialist mortgage lenders that consider applicants with IVAs, so it’s worth enquiring.

If you’d like some help finding the right mortgage for you after an IVA, get in touch with one out our specialist advisors!

Find a mortgage

Once you’ve found a property you’d like to purchase, found a lender that will approve you and make a successful offer on the property, you should be able to make a formal mortgage application as usual. See our guide to applying for a mortgage.

A few things that can speed up the process beforehand

Request a competition certificate

First of all, you should request a certificate of completion from your insolvency practitioner as soon as you finish your IVA. This can be used to prove to lenders that you’ve completed your IVA successfully and made all your repayments.

Save up your deposit

Generally, the chances of being accepted for a mortgage increase with a larger deposit. After finishing an IVA, you’ll have work to do on your credit report but even with a good credit score, an IVA might still need to be declared. A larger deposit helps offset the risk for the lender, making them more likely to offer you a mortgage with better rates.

The more time that passes after finishing your IVA, the better- in the eyes of the lender. If you wait long enough, using the time to rebuild your credit and prove you’re a responsible borrower, you could access a mortgage with as little deposit as 5% with a 95% mortgage.

You should be used to budgeting and paying your IVA over the past few years. It’s worth looking at saving the money you used to pay into your IVA into a savings account to help save for your deposit.

Assuming your IVA payment was £250 per month, after 5 years that amounts to £15,000 – which would pay for a deposit on a £150,000 house should you be eligible for a 90% LTV mortgage, which could be possible 5 years following the end of your IVA. – read more here

Work on rebuilding your credit score

An IVA will likely leave you with a poor credit score. It’s worth working on improving this before applying for a mortgage to increase your access to better rates, products and deals. Luckily, there are plenty of ways to help improve your credit score.

  • Make sure you’re on the electoral roll. This will help lenders confirm your identity and address.
  • Close your unused accounts. If you’re not using a credit account, you should close it if you want to improve your credit report. Some lenders look at available credit limits when deciding whether to approve you for a mortgage, having fewer open accounts with on-time repayments may appear better than many open, but unused accounts.
  • Make sure the credit you take out is responsible and beneficial to your score. Proving your ability to repay credit is something lenders view favourably, but credit like payday loans shows an inability to manage money and lenders look unfavourably on it. Check the type of credit you’re taking is viewed as responsible.
  • Space out your credit applications. Making several applications over a short period of time can harm your credit score, it can give the impression that you’re reliant on credit and lenders view this as risky. Spacing out your applications and ensuring you can make the repayments shows you’re not reliant on credit, you can make payments on time and you take consideration before entering a new credit agreement.
  • Make sure you make all repayments for outstanding debts on time and as soon as possible. Creating a thorough financial budget plan can help you do this, paying off outstanding debts can also leave you with more disposable income to put towards a larger deposit.

For more information on improving your credit score, see here

IVA FAQ

You can get a mortgage after an IVA (Individual Voluntary Arrangement) but your choices may be more limited depending on the amount of time you have been out of the voluntary arrangement. Clever Mortgages are specialist mortgage brokers with a wealth of experience in helping to source an adverse credit mortgage after an IVA has completed.

8 mortgage lenders after an IVA

If you would prefer to speak to an Expert IVA Mortgage Adviser now, then please call us on 0800 197 0620 for mortgage advice.

6 years after an IVA is registered the mark on your credit file should have come off and you should have received your completion certificate from your insolvency practitioner. This is worth checking on your credit file and also on the Insolvency Register.

Even with your credit file no longer showing an IVA it will have affected your credit rating and it can be difficult to get mainstream lenders to view your remortgage or mortgage application favorable. Luckily, there are often lenders who may provide a mortgage after an IVA. These specialist lenders are often referred to as “adverse mortgage lenders”.

Adverse mortgage lenders are found and assisted by master brokers like Clever Mortgages, who help gather information and give the required advice so you can make an informed decision.

The process of finding and applying for a mortgage after an IVA is the same as most other applications, requiring documentation and an affordability assessment. All of which Clever Mortgages can assist you with.

You are likely to have mortgage options straight after finishing your IVA. Your credit rating may cause your options to be somewhat limited and have a few restrictions, but it is worth investigating.

The number of specialist mortgage lenders willing to consider mortgages after an IVA will likely increase the longer you have been out of an arrangement.

There are also other lending products that could be possibilities such as Secured Loans or Product switches.

In some cases, there may be lenders who would consider a remortgage with you during the IVA, but with certain requirements, such as using funds to settle the IVA.

Some lenders may decline any application for a mortgage if you have ever had an IVA, but specialist lenders could consider applications regardless of your IVA history. Generally the longer the IVA has been completed, the more lenders may become options. High street lenders may have a harder time placing your situation within their criteria, which is where a specialist master broker like Clever Mortgages comes in.

Regardless of how long ago your IVA has completed, or even if you are looking for options and you are still in your IVA we can provide advice on getting a mortgage after an IVA.

Clever Mortgages have a team of mortgage advisors who have helped many other people coming out of an IVA to make successful mortgage applications and remortgages.

The range of mortgage interest rates as of 26th March 2019 are between 1.52% to 3.63%**

Clever Mortgages were able to find a mortgage for one of our customers recently which saw him save money on mortgage fees, get a competitive 1.90% rate and get this rate fixed for 5 years *APRC representative of 3.6%

Remortgaging whilst you are in an active IVA is possible, but there are only a few specialist lenders who would consider your case. The reason for your remortgage would also determine whether or not you were able to pursue this option.

When remortgaging within an IVA there could be requirements from the lender, such as having to use released funds to settle the IVA early.

You could remortgage during the IVA to find a better rate or to fix the interest amounts but if your intention is to release equity, you would likely be expected to pay some of this into the voluntary arrangement.

These cases are certainly worth talking with Clever Mortgages about, as they are experts in remortgaging within IVA arrangements and after their completion.

Remortgaging after an IVA could be one of the first actions you take following the completion of your debt solution arrangement. The remortgage could be used to lower your payments, interest rate or to release funds for home improvements.

Overall the rates you can get will be determined by whichever lenders are available to you.

Clever Mortgages were able to consolidate the clients’ secured loan and his current mortgage into a new mortgage package. This took the clients monthly payments from £1,162 per month down to £650 saving £512 per month. *APRC representative of 3.6%

The deposit size will vary by the lenders available to you, but you may be less impacted by your completed IVA history or debt solution than you think.

Some lenders may expect larger than average deposits due to your credit rating, whereas some may only expect the standard deposit size from 5% to 10% of the property value.

Saving for the deposit can be an ordeal but you could reassign your monthly IVA payment amount into a separate account, creating a mortgage deposit savings pot.

Just because you have completed an IVA does not necessarily stop you from taking advantage of other deals such as; First Time Buyer initiatives like a 5% deposit scheme or Right to Buy schemes.

Another option is the Help-To-Buy scheme which could be an option depending on your circumstances and eligibility.

Your credit report will show your IVA for 6 years from the date of issue (From the start of the IVA). An IVA is an individual voluntary arrangement, meaning the term is adjusted based on your specific circumstances but usually last between 5 to 6 years, after which time you will receive a completion certificate from your insolvency practitioner.

This means that at the end or a year thereafter, the IVA will no longer be recorded as an active debt solution arrangement on your credit report. This does not mean that your credit reference will not show any debts or adverse credit like defaults or missing payments that were not included in your IVA.

Clever Mortgages are a specialist broker and can help you find a mortgage after an IVA and provide you with more information on the after effects of an IVA on a mortgage or remortgage application, including your chances of being accepted.

You can check your credit report from sites such as Experian, Noddle or Check My File which are able to give you an idea of what mortgage lenders base some of their decisions upon.

Clever Mortgages would use the Noddle report of your circumstances as it includes information on both Experian and Equifax. Credit reports directly from either Experian or Equifax could miss information shown on its counterpart.

Once you have a copy of your current credit profile, please complete the enquiry form below and the Clever Mortgages team can provide you with specialist advice and help find the options available to you.

A lender may consult one or more of the credit referencing agencies to help them make a decision on whether to lend to you. This can result in them potentially seeing more information on your credit profile than you would have access to (using just one credit referencing source).

A credit reference is done by a lender or mortgage broker as a part of any mortgage or remortgage application. This search is standard and highlights any current or past outstanding debts such as unsecured debt, hire purchase and secured debts.
* APRC Representative Example Mortgage amount £170,995 (including £995 mortgage lender fee), 64 payments of £748.30 at a fixed interest rate of 2.28%, followed by 236 mortgage repayments of £889.60 at a variable rate of 4.24%. Over a term of 25 years, giving a total amount payable of £258,861 at an APRC representative of 3.6%. The contract will be secured against your property.

**Based on rates available from 3 major lenders, lending on 85% LTV for a residential purchase, gift as deposit, 25-year term, and if IVA is no longer on credit file.

What to do next

Speak to our expert brokers on all types of free advice on mortgages, remortgages, even if you have bad credit. One of our expert brokers will be able to review your current situation and advise on the best way of moving forward with our knowledge and access to over 100 lenders. The initial advice is free, there is only a cost if you proceed with a mortgage.

Can I get a mortgage during an IVA?

If you’re in an IVA, it’s likely that you’ll struggle to find a lender that will approve your mortgage application. This doesn’t mean you won’t be able to find one, however it’s probable that any lender willing to accept an applicant with an active IVA will have very high interest rates, and if you’ve struggled with repayments in the past then this may affect you adversely in the long-term.

An IVA stays on your credit report for 6 years from the date of approval and often decreases your credit score. Most people with IVA’s have a bad, or poor credit score and this is something lenders consider when deciding whether to approve someone for a mortgage.

You also need to remember that during an IVA, you’re not allowed take out credit (borrow) over £500 during your term without getting written permission from your insolvency practitioner and it’s

unlikely your practitioner will allow you to do this, unless it’s for something like remortgaging to pay off your IVA.

It’s usually best to wait until you’ve completed your IVA to apply for a mortgage. It could be possible to get a mortgage during an IVA- if you can find a lender and get permission from your insolvency practitioner- but waiting until the IVA has been completed increases your eligibility for better rates and products.

How long does an IVA stay on your credit report?

An IVA will stay on your credit report for 6 years, starting from the date your IVA was approved. Once you have completed the term of your IVA it will be marked as complete but will still be on your record until the 6-year period ends.

So, if your IVA has a term of 5 years, it will be removed from your credit report 1 year after completion.

Your IVA will also be added to the Individual Insolvency Register, but it’ll be removed 3 months after your IVA ends. (Source)

Once your IVA finishes, you should request a certificate of completion from your insolvency practitioner. This can be used to prove you’ve finished your IVA.

Can I Remortgage in an IVA?

If you’re wanting to remortgage in order to release equity to settle your IVA, there is a chance that your insolvency practitioner will approve, especially if it lowers your current monthly expenditures so you can pay more towards your IVA or pay it off in full with the money acquired through remortgaging. Your IVA will probably have negatively impacted your credit score, so it’s likely you’ll have to go through a specialist lender to remortgage.

Luckily, our expert brokers at Clever Mortgages have access to 8 of these specialist lenders and a wealth of experience helping people in an IVA remortgage. If you’re in an IVA and want to remortgage, get in touch with one of our expert advisors.

Can I get a mortgage straight after an IVA has been settled?

Once your IVA has been settled successfully, you’re in a much better financial position to apply for a mortgage and it’s far more likely you’ll be accepted, however it could be difficult. An IVA stays on your credit report for 6 years from the date of approval which can have a negative impact on your credit score, making it hard to find a high-street lender that will approve your mortgage application if the IVA is still on your credit report. This doesn’t mean it’s the end of the road though- you could still get a mortgage after an IVA with fairly competitive rates though a specialist lender. Many specialist lenders consider applicants with bad credit, even if it has been caused by a recent IVA- and here at Clever Mortgages we have access to these specialist lenders, helping thousands of people with a poor credit history get onto the property ladder.

Get in touch with one of our specialist advisors to find out more.

Can I get a mortgage after an IVA is off my credit report?

Once your IVA has been settled and has dropped off your credit report, assuming you can prove you can make repayments, you could get a mortgage. Many people chose to wait for their IVA to drop off their credit report before applying for a mortgage to access better rates and products, as lenders rarely view a recent IVA or one still on your credit record favourably.

It’s likely you’re aware of the negative impact your IVA might have had on your credit score, and if you’re choosing to wait for the removal of your IVA, or if it’s already been removed, this is an ideal time to look towards building your credit rating and cultivating a healthy credit report to show lenders you’re a responsible borrower.

It’s important to be aware that mortgage providers will often ask you to declare if you’ve ever had credit issues in the past, such an in IVA. This may affect eligibility but being able to prove you can make the repayments in ways such as repairing your credit score, paying off your debts and proving a stable income will increase your chances of being accepted.

It’s a good idea to speak to a broker before making a mortgage application if you’ve been in an IVA. When you make a mortgage application, the lender will do a hard credit check and should it be declined, this may affect your credit score. Going through one of our specialist brokers means you’ll have a clear indication of which lenders are likely to accept you before you apply and have a better scope of rates and products giving you a far more informed decision.

If you’re thinking about getting onto the property ladder after an IVA, get in touch with one of our specialist advisors now!

What deposit will I need if I’ve had an IVA?

If you’ve waited for your IVA to be removed from your credit report and improved your credit score, depending on your financial situation, you might be able to get a mortgage with as little as 5% or 10% deposit through a specialist lender. (source)

The larger the deposit you manage to save after an IVA, the more chance you have of being accepted for a mortgage with better rates, this is because lenders view larger deposits as a less risky investment. If you’ve been paying an IVA for several years, you’ll be used to budgeting to pay the monthly sum, once your IVA has been settled you could use the money to save towards a deposit instead, especially if you’re seeking a mortgage fairly soon after your IVA has been completed.

To access the best rates and products after an IVA, it’s best to save up as much as possible for your deposit before applying for a mortgage, you could save as little as 5% but a 15%-25% deposit will give you a greater chance of being accepted for a mortgage with lower interest rates and better deals. As most lenders will ask you disclose previous credit agreements like an IVA, a larger deposit will help the lender view you as a less risky investment after your previous financial problems and increase the chances of a lender offering a more attractive deal. 

What to do next

Speak to our expert brokers on all types of free advice on mortgages, remortgages, even if you have bad credit. One of our expert brokers will be able to review your current situation and advise on the best way of moving forward with our knowledge and access to over 100 lenders. The initial advice is free, there is only a cost if you proceed with a mortgage.

Helpful IVA information

How do IVA’s work?

To create an Individual Voluntary Agreement, your insolvency practitioner will first take details of your financial information:

  • Income
  • Expenditures
  • Creditors
  • Debts
  • Assets
  • Any other relevant information

They will then work out how much you can afford to repay and how long the IVA will last. IVA’s usually last around 5-6 years but it’s mostly dependant on your income and how much money you owe.

Once your insolvency practitioner has worked out the details of your IVA, they will contact your creditors. At least 75% of the creditors must agree to your IVA proposal for the IVA to go ahead, your creditors may request some modifications, but your insolvency practitioner will be able to negotiate on your behalf until an agreement can be made. (source)

An IVA can freeze interest on the debts you owe, stop creditors taking legal action against you to reclaim moneys owed (as long as you maintain your agreement), help you pay back your debt and potentially write some debt off at the end of your IVA term. You will pay a monthly sum to your insolvency practitioner who will distribute the funds accordingly to your creditors.

You will have to pay your insolvency practitioner fees. There is usually a fee to set up your IVA and a handling fee for each monthly payment- some insolvency practitioners will include their fees in your monthly payment if you can’t afford the lump sum. If you enter an IVA, it’s important to be aware of possible fees and to be sure you can make the monthly payments, as your insolvency practitioner can cancel your IVA if you miss payments- making you liable for legal action taken by your creditors to reclaim money owed.

Your IVA will be added to the Individual Insolvency Register but will be removed 3 months after the IVA ends.

IVA’s can help pay off most common debts, such as;

  • Unsecured loans
  • Catalogue debts
  • Council Tax Arrears
  • Credits cards
  • Money owed to HM Revenue & Customs
  • Mortgage shortfalls
  • Overdrafts

IVA’s cannot be used to pay;

  • Magistrate’s court fines
  • Child Maintenance
  • Child Support arrears
  • Student loans
  • Certain car finance

An Individual Voluntary Agreement is a legal agreement set up between you and your creditors to pay back all, or some of your debt affordably over a set period of time. It must be set up by a qualified insolvency practitioner, agreed on by your creditors and approved by the court.

An insolvency practitioner is someone who’s licensed and qualified to act on the behalf of companies, businesses and individuals who are facing insolvency- an inability to repay money owed.

Insolvency practitioners can assist with highly complex financial situations, negotiating with creditors and helping to create and enforce an affordable payment plan to get you out of debt.

A creditor is the person, business or company that you owe money to.

What to do next

Speak to a broker

Arrange a callback with one of our expert mortgage brokers who can analise your situation and advise of the best way forward at a time thats convienient for you. Alternatively, use the live chat in the bottom corner.

Complete our form

Complete our mortgage form. Although its not a mortgage application, and will not affect your credit score, it will give you a good indication of what you can borrow and afford, as well as giving our brokers a bit more information about you.