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Can I get a Mortgage after an IVA?

26/02/2018

Creditfix > Knowledge Hub > > Can I get a Mortgage after an IVA?

One of the most popular worries for those with or considering an IVA surround ‘IVA mortgages’; whether or not having an will affect their chances of getting a mortgage in the future.

Having an IVA will damage your ability to get credit – but so does having problem debt. It can bring your credit score down and make it seem like your dream of buying a house is further away than ever.

Despite this, it is possible to get a mortgage once your IVA has ended. In this article, we’ll explore IVAs and mortgages, including what an IVA does to your credit file, how having an IVA affects your chances with high street mortgage lenders, and whether you should consider specialist lenders for your mortgage.

Why choose Creditfix?

  • Write off unsecured debts over £5,000
  • Stop interest and charges soaring
  • Reduced payments from £85 per month

What is an IVA?

IVA stands for Individual Voluntary Arrangement, which is a legally binding agreement between a person and the people they owe money to to repay their unsecured debt.

They are set up and supervised by an Insolvency Practitioner, who looks at your circumstances and makes a payment plan to fit your needs. Once approved, they will then take over all communication with the companies included and your IVA will be noted on the Insolvency Register.

How does an IVA work?

It’s agreed that they will make one regular affordable payment for a set amount of time, after which any remaining balances will be written off.

All interest and charges on your debts will also be frozen once approved and the companies included cannot demand payment from you. At this point, the only thing that’s needed from you is to keep up with your payments for the agreed amount of time.

Once completed, your IVA is removed from the register and any debt left over is written off. You will then owe nothing to the companies that were included, and you can go forward with a fresh start.

How long does an IVA last?

An IVA will usually last for five years, however, this can be extended to up to seven years depending on certain circumstances, and the impact on your credit rating will continue for a time after the arrangement is complete.

Extensions usually happen in cases where there is an owned house or a change in circumstances means payments are dropped below a certain level.

If this is to happen, you will be told beforehand, and we will work through it with you to make sure everything is made clear.

Does an IVA affect your credit history?

The main reason that getting a mortgage following an IVA can be difficult is that it will be noted on your credit report and will stay listed on your credit history for a while after it has ended.

Your credit file is used by companies to try and measure how likely you are to be able to repay what you borrow based on your history. As such, having an IVA lets them know that you have had trouble paying back debt in the past.

Credit files contain six years’ worth of credit history. This means that a typical IVA will be visible on your file for around a year after you’ve finished it.

A mortgage broker will be able to view this information and for this reason, it is a good idea to wait until the IVA has dropped off your credit file before applying for a mortgage.

You can check this by requesting a copy of your credit file from one of the UK’s credit reference agencies – Experian, Equifax, or Callcredit. It usually costs around £2 for a one-off request.

How we helped Michael

Absolutely fantastic professional staff understanding and non judgmental Fantastic service quick too ! Would recommend to anyone!!"

Michael, Sunderland

Get help like Michael did

How to get a mortgage after your IVA

Because of the restrictions on your spending, it’s extremely difficult to get a mortgage with an active IVA. That said, there’s nothing to stop you getting a mortgage after an IVA if you can find the right mortgage lender.

The best way to improve your chances of getting a mortgage following an IVA is to rebuild your credit score. This will show possible lenders that you can repay what you borrow, and as such be able to keep up with your mortgage payments.

The process can seem long, but it is definitely worth taking the time to rebuild your credit score, to make sure you get the best possible deal on a mortgage. There are plenty of ways to rebuild your credit score after an IVA.

Get a Completion Certificate

The first thing you should do to rebuild your credit score after an IVA in preparation for a mortgage application, is to request a certificate of completion from your Insolvency Practitioner (IP).

This proves that your Individual Voluntary Arrangement has been successfully completed and means you’ll always have evidence of this to hand.

Check your Details

Making sure that your details are up to date can have a surprisingly positive impact on your credit score. Check your report regularly and make sure all your personal and account details are correct to avoid any mistakes causing you problems.

Registering on the electoral roll also guarantees that lenders know you have a stable address, which can make a big difference.

Pay bills on time

Simple as it sounds, paying bills on time does gradually build up a history of consistent payments. Setting up direct debits can be the best way to do this.

You could also consider switching providers to ensure you are getting the cheapest deal, making it a little easier to pay each month.

Consider a credit-builder card

Some credit card providers offer cards specifically designed for people with lower credit scores hoping to improve them.

However, these cards tend to have higher interest rates than normal ones (around 30% APR). Nevertheless, they can be a good stepping stone towards being given better value credit.

If you do decide to rebuild your credit in this way, be careful to pay your balance in full each month and use it sparingly, at least at for the first few months.

Finding a suitable mortgage lenders

Getting a mortgage is one of the biggest purchases most of us will make in our lifetimes, so it is important to take some time to think about your options.

If you are worried about your credit file, you may wish to seek advice from a professional mortgage broker instead of only applying to the high-street banks. They will be able to give you the best advice based on your personal situation.

Think before going with a specialist mortgage broker

For people with poor credit who can’t find a conventional mortgage lender, it can be tempting to turn to specialist mortgage lenders who offer what could reasonably be called ‘bad credit mortgages’.

Unlike a traditional mortgage company, a specialist mortgage lender will target people who have had credit issues in the past, and use unrealistic claim like ‘guaranteed acceptance’ to reel people in.

While this may sound like a great deal, you should be wary of IVA mortgage lenders like these. Their business model often involves targeting people who don’t have many other options, then charging them exorbitant fees, including interest rates much higher than the average high street lender.

It might be tempting to try and jump on the property ladder as soon as your debt solution is completed, but in the long-term, you are more likely to have your mortgage application approved by taking a few years to rebuild your credit score and save for a deposit.

Where can I get more advice on Can I get a Mortgage after an IVA? and other debt solutions?

To discuss your options and get the support you need to deal with your debt today, contact us now on 0800 0431 431 or click the button to get started

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Can I get a Mortgage after an IVA?

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One of the most popular worries for those with or considering an IVA surround ‘IVA mortgages’; whether or not having an will affect their chances of getting a mortgage in the future.

Having an IVA will damage your ability to get credit – but so does having problem debt. It can bring your credit score down and make it seem like your dream of buying a house is further away than ever.

Despite this, it is possible to get a mortgage once your IVA has ended. In this article, we’ll explore IVAs and mortgages, including what an IVA does to your credit file, how having an IVA affects your chances with high street mortgage lenders, and whether you should consider specialist lenders for your mortgage.

Why choose Creditfix?

  • Write off unsecured debts over £5,000
  • Stop interest and charges soaring
  • Reduced payments from £85 per month

What is an IVA?

IVA stands for Individual Voluntary Arrangement, which is a legally binding agreement between a person and the people they owe money to to repay their unsecured debt.

They are set up and supervised by an Insolvency Practitioner, who looks at your circumstances and makes a payment plan to fit your needs. Once approved, they will then take over all communication with the companies included and your IVA will be noted on the Insolvency Register.

How does an IVA work?

It’s agreed that they will make one regular affordable payment for a set amount of time, after which any remaining balances will be written off.

All interest and charges on your debts will also be frozen once approved and the companies included cannot demand payment from you. At this point, the only thing that’s needed from you is to keep up with your payments for the agreed amount of time.

Once completed, your IVA is removed from the register and any debt left over is written off. You will then owe nothing to the companies that were included, and you can go forward with a fresh start.

How long does an IVA last?

An IVA will usually last for five years, however, this can be extended to up to seven years depending on certain circumstances, and the impact on your credit rating will continue for a time after the arrangement is complete.

Extensions usually happen in cases where there is an owned house or a change in circumstances means payments are dropped below a certain level.

If this is to happen, you will be told beforehand, and we will work through it with you to make sure everything is made clear.

Does an IVA affect your credit history?

The main reason that getting a mortgage following an IVA can be difficult is that it will be noted on your credit report and will stay listed on your credit history for a while after it has ended.

Your credit file is used by companies to try and measure how likely you are to be able to repay what you borrow based on your history. As such, having an IVA lets them know that you have had trouble paying back debt in the past.

Credit files contain six years’ worth of credit history. This means that a typical IVA will be visible on your file for around a year after you’ve finished it.

A mortgage broker will be able to view this information and for this reason, it is a good idea to wait until the IVA has dropped off your credit file before applying for a mortgage.

You can check this by requesting a copy of your credit file from one of the UK’s credit reference agencies – Experian, Equifax, or Callcredit. It usually costs around £2 for a one-off request.

How we helped Michael

Absolutely fantastic professional staff understanding and non judgmental Fantastic service quick too ! Would recommend to anyone!!"

Michael, Sunderland

Get help like Michael did

How to get a mortgage after your IVA

Because of the restrictions on your spending, it’s extremely difficult to get a mortgage with an active IVA. That said, there’s nothing to stop you getting a mortgage after an IVA if you can find the right mortgage lender.

The best way to improve your chances of getting a mortgage following an IVA is to rebuild your credit score. This will show possible lenders that you can repay what you borrow, and as such be able to keep up with your mortgage payments.

The process can seem long, but it is definitely worth taking the time to rebuild your credit score, to make sure you get the best possible deal on a mortgage. There are plenty of ways to rebuild your credit score after an IVA.

Get a Completion Certificate

The first thing you should do to rebuild your credit score after an IVA in preparation for a mortgage application, is to request a certificate of completion from your Insolvency Practitioner (IP).

This proves that your Individual Voluntary Arrangement has been successfully completed and means you’ll always have evidence of this to hand.

Check your Details

Making sure that your details are up to date can have a surprisingly positive impact on your credit score. Check your report regularly and make sure all your personal and account details are correct to avoid any mistakes causing you problems.

Registering on the electoral roll also guarantees that lenders know you have a stable address, which can make a big difference.

Pay bills on time

Simple as it sounds, paying bills on time does gradually build up a history of consistent payments. Setting up direct debits can be the best way to do this.

You could also consider switching providers to ensure you are getting the cheapest deal, making it a little easier to pay each month.

Consider a credit-builder card

Some credit card providers offer cards specifically designed for people with lower credit scores hoping to improve them.

However, these cards tend to have higher interest rates than normal ones (around 30% APR). Nevertheless, they can be a good stepping stone towards being given better value credit.

If you do decide to rebuild your credit in this way, be careful to pay your balance in full each month and use it sparingly, at least at for the first few months.

Finding a suitable mortgage lenders

Getting a mortgage is one of the biggest purchases most of us will make in our lifetimes, so it is important to take some time to think about your options.

If you are worried about your credit file, you may wish to seek advice from a professional mortgage broker instead of only applying to the high-street banks. They will be able to give you the best advice based on your personal situation.

Think before going with a specialist mortgage broker

For people with poor credit who can’t find a conventional mortgage lender, it can be tempting to turn to specialist mortgage lenders who offer what could reasonably be called ‘bad credit mortgages’.

Unlike a traditional mortgage company, a specialist mortgage lender will target people who have had credit issues in the past, and use unrealistic claim like ‘guaranteed acceptance’ to reel people in.

While this may sound like a great deal, you should be wary of IVA mortgage lenders like these. Their business model often involves targeting people who don’t have many other options, then charging them exorbitant fees, including interest rates much higher than the average high street lender.

It might be tempting to try and jump on the property ladder as soon as your debt solution is completed, but in the long-term, you are more likely to have your mortgage application approved by taking a few years to rebuild your credit score and save for a deposit.

Where can I get more advice on Can I get a Mortgage after an IVA? and other debt solutions?

To discuss your options and get the support you need to deal with your debt today, contact us now on 0800 0431 431 or click the button to get started