Can I get a mortgage if I have had an IVA? Are there lenders who will help?
An IVA (Individual Voluntary Arrangement) is often sought as a method of relieving financial hardship, but the impact on an individual’s credit rating is considerable and will significantly impact on the likelihood of being able to get a mortgage with a traditional mainstream lender. Thankfully, there are some lenders who make decisions on a case by case basis and may be willing to offer you a mortgage depending upon your own individual circumstances.
A change in circumstances such as unemployment, redundancy, ill health or divorce can lead to financial hardship and rising debt. The IVA was introduced by the government in 1987 as a less restrictive alternative to bankruptcy for people who are struggling with serious debts. It is a legally binding contract between an individual and the creditors, with creditors agreeing to wipe out a proportion of the debt in return for the individual making a regular monthly repayment for a period of 5 years which can be extended to 6.
There is no denying securing a mortgage when you have had an Individual Voluntary Agreement can be a challenge, particularly if it still shows on your credit file or was completed within the past couple of years. The good news is as a whole of market mortgage broker specialising in bad credit cases, we have extensive experience of helping people get a mortgage including those who have had an IVA. Contact us today to see if we can help you.
High street lenders likely to see you as too risky
If you have had an IVA, you are likely to be seen as a risky borrower by most mainstream lenders because of your previous debt problems. Details of your IVA will be held on your credit file for six years from the date the IVA starts, even if you pay off the IVA early. As most mortgage lenders undertake credit checks on new applicants, they will be able to see from your credit file that you're in an active IVA or have recently completed one. Your position with a traditional lender improves once the IVA drops off your credit report and your opportunities to get a mortgage increase the greater the length of time that has elapsed since your IVA was completed.
Specialist lenders could provide a route to a mortgage
If you have had an IVA and are looking to get a mortgage or remortgage, contact us for a free no obligation initial consultation. We work with specialist lenders who will not automatically reject someone who has entered into an IVA.
Any prospective lender will want to examine your financial conduct since the IVA took place and determine your affordability for them to be confident you present as a creditworthy customer.
You will also be expected to provide a deposit of at least 10% to mitigate that risk.
As a whole of market mortgage broker, we can make a difference, we will look at your individual situation and advise what lenders would suit your circumstances best.
Example scenario
Rebecca got into financial difficulties when she was made redundant from her 6-year job as a retail store manager. Her income fell by nearly £1,600 per month and, before she knew it, she was struggling to keep her head above water financially. She had rent commitments plus payments to be made on her credit card and car finance.
She had difficulty securing a new job and as late payments on her credit card and car finance worsened, she decided the only course of action was to move in with her parents and take out an IVA.
Six years later, Rebecca has regained control of her finances and her life is back on track with her IVA settled. She is now married and has a two-year-old child. Rebecca retrained and now works in IT. She and her husband want to purchase a property, but Rebecca’s past financial difficulties are likely to count against her when it comes to getting a mortgage. Her best approach would be to contact us, as a whole of market mortgage we will ascertain the most suitable deal and have access to specialist lenders who are more tolerant of individuals with past credit difficulties.
This example demonstrates the type of individuals we can assist.