If you’ve ever had an IVA or are currently in the process of paying debts off through an Individual Involuntary Agreement, you might be worried that your chances of getting a mortgage are blown.
If you have an IVA, your credit score may be lower which can reduce your choice of rates and deals. A common misconception is that having an IVA results in an automatic mortgage rejection but that’s not always the case...
When you apply for a mortgage, lenders will carry out a credit check to determine your creditworthiness and an IVA can make some lenders feel hesitant about loaning at all.
Some lenders have criteria that prevents them from accepting mortgage applicants with IVAs but there are a handful that do consider borrowers with IVAs. (You can ask one of our experts about which lenders currently accept IVA mortgage applications here!)
Usually the higher your credit score the better as this signifies to lenders that you have a history of good money management. Remember - that’s important to a lender considering they may be loaning you hundreds of thousands of pounds.
While our broker’s end goal is to find you a mortgage that ends with a successful completion, they’re also focussed on finding you the best possible interest rate. Lenders typically offer their best rates to customers with clean credit scores so having an IVA can certainly result in a reduced choice of lenders and higher interest rate.
The brokers at The Mortgage Hut have secured mortgages for many borrowers with IVAs and this is often because of their knowledge of lenders, more specifically, which ones are more likely to approve an IVA mortgage.
To truly understand the rate that any given lender may offer you in light of your IVA speak to a mortgage broker who can assess your financial circumstances and recommend the best option.
More important than your Individual Voluntary Arrangement is the behaviour that follows it and some lenders may be willing to take your more recent financial habits into consideration.
Most mortgage providers like to see two years of clean credit history, especially in instances where the applicant has had an IVA or other forms of bad credit on their report.
In order to build and then maintain a good credit score avoid:
The type of property you’d like to buy
Most mortgage providers like to see two years of clean credit history, especially in instances where the applicant has had an IVA or other form
Buildings that have been constructed with non-standard materials can be expensive to repair and this raises red flags for lenders as they want to be sure that you can afford or cover them through insurance.
Self-employed workers may need a larger deposit if their income fluctuates throughout the year and is less predictable.
The price of your property
The higher the price of the property, the larger percentage of deposit that the lender may ask for. Lenders that accept applications from people who have had or are in an IVA often have lower loan to value limits than high street lenders.
Your age
If you are close to retirement or currently retired, lenders may have concerns about your affordability and may require a higher deposit.
The type of mortgage you are applying for
The amount of deposit you need for a mortgage with or after an IVA can vary depending on whether you need a Buy to Let, Commercial, Overseas or a Residential mortgage. Each product will have differing terms, conditions and criteria to meet.
If you have an IVA, your credit score may be lower which can reduce your choice of rates and deals. A common misconception is that having an IVA results in an automatic mortgage rejection but that’s not always the case...
What is an IVA?
IVAs are a way to resolve a history of poor credit without slipping into bankruptcy. Through an IVA, you work out a plan through an insolvency agent to pay your creditors and leave yourself debt free at the end.Can lenders see my IVA on my credit report?
Yes, an IVA is a legally binding agreement and will be present on your credit history for a full six years following its completion.When you apply for a mortgage, lenders will carry out a credit check to determine your creditworthiness and an IVA can make some lenders feel hesitant about loaning at all.
Some lenders have criteria that prevents them from accepting mortgage applicants with IVAs but there are a handful that do consider borrowers with IVAs. (You can ask one of our experts about which lenders currently accept IVA mortgage applications here!)
Does having an IVA on my report lower my credit score?
Yes it most likely will, especially if it’s still active on your report. It’s important that you pay off an IVA on time as defaulting on your plan could result in your credit score decreasing further and this could decrease your choice of lenders and rates.Usually the higher your credit score the better as this signifies to lenders that you have a history of good money management. Remember - that’s important to a lender considering they may be loaning you hundreds of thousands of pounds.
Can I get a mortgage after an IVA with a good interest rate?
Working with a professional who understands the current market as well as where to look for the best deals, is a great way of finding a good interest rate.While our broker’s end goal is to find you a mortgage that ends with a successful completion, they’re also focussed on finding you the best possible interest rate. Lenders typically offer their best rates to customers with clean credit scores so having an IVA can certainly result in a reduced choice of lenders and higher interest rate.
The brokers at The Mortgage Hut have secured mortgages for many borrowers with IVAs and this is often because of their knowledge of lenders, more specifically, which ones are more likely to approve an IVA mortgage.
To truly understand the rate that any given lender may offer you in light of your IVA speak to a mortgage broker who can assess your financial circumstances and recommend the best option.
Can I get a mortgage with an active IVA?
In some circumstances it could be possible to secure a mortgage deal during an active IVA.More important than your Individual Voluntary Arrangement is the behaviour that follows it and some lenders may be willing to take your more recent financial habits into consideration.
Most mortgage providers like to see two years of clean credit history, especially in instances where the applicant has had an IVA or other forms of bad credit on their report.
In order to build and then maintain a good credit score avoid:
- Missed payments
- Maxing out or getting close to your credit limit on any cards or accounts
- Multiple credit applications in a small space of time
How much deposit will I need for a mortgage after an IVA?
This really depends on a multitude of factors including:The type of property you’d like to buy
Most mortgage providers like to see two years of clean credit history, especially in instances where the applicant has had an IVA or other form
Buildings that have been constructed with non-standard materials can be expensive to repair and this raises red flags for lenders as they want to be sure that you can afford or cover them through insurance.
Your income type
Self-employed workers may need a larger deposit if their income fluctuates throughout the year and is less predictable.
The price of your property
The higher the price of the property, the larger percentage of deposit that the lender may ask for. Lenders that accept applications from people who have had or are in an IVA often have lower loan to value limits than high street lenders.
Your age
If you are close to retirement or currently retired, lenders may have concerns about your affordability and may require a higher deposit.
The type of mortgage you are applying for
The amount of deposit you need for a mortgage with or after an IVA can vary depending on whether you need a Buy to Let, Commercial, Overseas or a Residential mortgage. Each product will have differing terms, conditions and criteria to meet.
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Bad Credit Mortgages Expert Article by
Nicola Schutrups
(Managing Director)
The Mortgage Hut