Article created by Christian Duncan, Director – Mortgage and Protection Adviser
Last updated 22nd December 2023
Table of Contents
Getting a mortgage with an IVA (Individual Voluntary Arrangements)
Homeownership is often seen as a measure of personal financial stability. However, for those who have experienced financial difficulties, the path to securing a mortgage can seem tough with various obstacles in your way. This is particularly true for individuals who have entered into an Individual Voluntary Arrangement (IVA). Nevertheless, with proactive measures and expert guidance, the journey toward getting a mortgage with an IVA might not be as daunting as it appears.
What is an IVA?
An IVA, which stands for Individual Voluntary Arrangement, is a legally binding agreement between a person and their creditors designed to resolve outstanding debts. It provides a structured payment plan typically spread over five to six years, offering the individual an alternative to bankruptcy. During this period, interest and charges on the debt are frozen, and creditors must cease further direct collection efforts.
Adhering to the terms of an IVA is paramount. Participants are obligated to maintain regular payments and promptly report any changes in financial circumstances to the IVA provider. While seeking to incorporate debts of any size, those pondering an IVA should be aware of associated fees, which might render alternatives more viable for debts less than £10,000.
Can I get a mortgage with An IVA?
Securing a mortgage under the shadow of an IVA is achievable. Traditional lenders might not be as sympathetic to your situation and will often refuse to lend. These roadblocks underscore why working with a mortgage broker who’s well versed in IVA complexities is a must.
Navigating the Mortgage Market with an IVA
While an IVA marks your financial history and has the potential to darken your credit report for six years post-agreement or until the fulfilment of the IVA if this period extends beyond six years, mortgage opportunities still exist. Some lenders, often operating beyond high street visibility. Subprime lenders do entertain mortgage applications from those within the completion threshold of an IVA. Once an IVA is satisfied and removed from the credit report, the prospect for acceptance is increased significantly.
Declare, Don’t Despair: Honesty on Applications
Transparency is crucial. Applicants with a history of an IVA should prepare to disclose this fact on mortgage applications, irrespective of an IVA’s appearance on current credit files. The directive here is simple: full disclosure mitigates the risk of fraudulent activity, reinforcing credibility with potential lenders.
Getting a Joint Mortgage and having an IVA
The plot thickens when two applicants intertwine in a joint mortgage application. Although having one applicant without an IVA on the scene might appear to be helpful. It actually wont impact a lending decision. If said applicant has an income they might improve affordability.
In summary, getting a mortgage with an IVA is far from a closed door; it’s a distinct path that requires careful navigation, reliable information, and an open dialogue between you, your mortgage broker and the lender. With patience, thorough preparation, and the right guidance, even those with an IVA can turn the key to homeownership.
Homeownership with an IVA doesn’t have to just be a dream. If you would like to speak with a specialist mortgage broker then please complete the contact form above.