People often come to us with questions about whether it’s possible to get a mortgage after an IVA (Individual Voluntary Arrangement). The simple answer is that it’s possible, but it will depend primarily on your individual circumstances. One of the most important factors is to choose the right lender, because getting a mortgage after an IVA is a more specialist financial area, and may require a specialist lender.

Before the financial crisis, lenders had fewer restrictions with regards to approving mortgages for people with bad credit. In other words, it was far simpler to get a mortgage after an IVA. However, this related approach led to a number of problems in financial markets. Many believe that offering top products to people with bad credit was one of the primary causes of the financial crash.

As a result, today’s lenders have adopted a more cautious approach when it comes to borrowers with credit issues. Thus, getting a mortgage with an IVA can be challenging, let alone a mortgage with good rates, but it can be done when you approach it correctly. There is a growing number of bad credit lenders arriving in the UK mortgage market, and there are even some competitive rates to be found.

What is an IVA?

An Individual Voluntary Arrangement is a formal agreement between an individual and his/her creditors to repay debts over a specific period of time. An IVA is arranged by an insolvency practitioner – these people are usually accountants or solicitors. An IVA is approved by the courts, making it legally binding, and recorded on the Insolvency Register.

An IVA is arranged by an insolvency practitioner by performing an assessment of your financial circumstances. The subsequent payment plan will be based on that assessment so that it suits the individual’s affordability. The needs of the creditors will also be taken into account to ensure the IVA meets the goals of both parties. During the IVA, the insolvency practitioner will communicate with creditors on behalf of the individual, and the term is usually around 5 years.

Once the creditors accept the IVA, all charges and additional interest will be frozen. Creditors do not have the right to demand payments from individuals during an IVA. The agreed debt will be paid monthly to the insolvency practitioner, who will then pay the creditors and take their own fee from the total.

Once the period of the IVA has passed, any remaining debt is usually written off. Thus, when the IVA is complete, the individual no longer owes money to the creditors. The record of the IVA on the Insolvency Register is officially removed.

Can I get a mortgage after an IVA?

The simple answer is yes, you can get a mortgage after an IVA. It may rule you out of consideration for the lowest mortgage rates, but specialist lenders might still be able to offer you some attractive rates.

That said, it is not straightforward to get a mortgage after an IVA. If you head straight to a high street lender, you may well find your application gets declined, particularly if your IVA is still in effect. The main challenge is that the IVA will be visible on your credit file, and your credit report will be one of the primary focuses of a lender’s assessment of your viability for a mortgage. Your IVA will place you in the high risk category, and this can heavily influence a lender’s decision-making when it comes to mortgage approval.

To secure a mortgage after an IVA, a specialist lender may be your best option. These lenders offer special mortgage products aimed at borrowers who are in an active IVA, or who have had one in the past. Though you may be able to get approved, you may have to accept higher interest rates and put down a bigger deposit.

Every mortgage application is unique, and lenders will assess each case individually, so there is no one-size-fits-all solution. You may be fortunate enough to be offered great rates without needing to put down a large deposit. Your financial circumstances are weighed alongside what you hope to achieve with your mortgage when lenders make a decision about approval. If you feel uncertain, make an enquiry with the experts at Think Plutus and ask us your questions.

How long does an IVA show up on my credit file?

An IVA usually appears on credit reports for 6 years from its date of registry. Even if the IVA is settled quicker than that, it will still show up in credit reports. Once you’ve paid off your debt AND those 6 years have passed, your credit report should be clean. This is generally the case for all credit issues.

Bear in mind, however, that lenders will usually ask borrowers to declare if they’ve ever had credit issues like an IVA. Once you declare an IVA, some lenders will decline your application, even with a clean credit file. Never try to withhold information – it won’t do you any good.

Many people assume a clean credit file will mean they will have no problem securing a mortgage, but this is not accurate. Even an excellent credit score and clean file doesn’t guarantee success. Many other factors are taken into account, such as affordability, other current loans and the long-term security of current income. These are just some of the many things that lenders will take into account, alongside your credit file, when making a decision about viability for a mortgage.

Check your credit file before you apply for a mortgage after an IVA

You can view your own credit report before you approach any lenders. Simply taking a look at your credit file won’t leave any kind of footprint that harms your credit score.

By checking your credit report, you can see for yourself what’s on there and what isn’t. Be aware that credit agencies occasionally make errors, so it’s important to check them. Websites like Check My File enable you to view all your credit reports in a single location.

How to get a mortgage after an IVA

You must be under no illusions: obtaining a mortgage after an IVA is not easy. You will have a mountain to climb if you attempt to go it alone, because most high street lenders will not even consider a bad credit mortgage. As we’ve mentioned, there are specialist lenders who will work with borrowers who have credit issues like IVAs, but there’s more to it than simply approaching them and getting approved.

An IVA will usually come after additional credit issues like late payments, defaults and CCJs. Unfortunately, these issues make you an even higher risk to a lender. More severe credit issues, like bankruptcy and repossession, will make it even more difficult to get approved (though still not impossible).

A mortgage application needs to be done right from the very beginning, and it must be placed with the right lender. The knowledge and experience of a mortgage broker can keep your risk of being declined to a minimum, and ensure you get the best rates available to you.

You need to work with a mortgage broker that specialises in the adverse credit market. Work with a broker who can construct a genuine, workable plan for your mortgage, rather than a broker who will just put things into motion and see what happens. In order to minimise the risk of being declined, a mortgage application must be approached in a structured way.

The mortgage advisers at Think Plutus specialise in adverse credit. We have secured mortgages for many borrowers with problems in their credit record. Get in touch today and speak to one of our expert advisers and we’ll explain what you can expect and how we will help you secure your mortgage with an IVA.

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