Can I get a mortgage with an IVA?
If your mortgage application has been declined because you have an IVA on your credit record, it’s still possible to get what’s known as a Bad Credit Mortgage. These mortgages have been designed for people with less than perfect credit scores or have things like IVAs or bankruptcies on their record.
They tend to be offered by lenders which have a greater appetite for risk than some of the more traditional High Street banks and building societies. Because there is more risk involved in lending to someone with an IVA, you’ll probably have to pay higher interest rates and may even need to come up with a larger deposit.
But, with the right expert support, you can still find lenders who will be willing to offer you a mortgage deal, even if you have an IVA.
What is an IVA?
An Individual Voluntary Agreement (IVA) is a formal, legally binding document to help you pay off your debts at an affordable rate. It’s kind of like a court-backed repayment plan. If you are struggling to repay your debts, you can apply for an IVA and, provided you stick to it, you’ll get protection from your creditors taking further action against you and some of your debt might also be written off.
An IVA is arranged by an insolvency professional, who will assess your financial situation and produce a repayment plan that you can afford. They will also consider creditors and what they might want to get from the IVA, before getting them to agree with it. Once your IVA is paid off, it will stay on your credit record for six years, which may have an impact on your chances of getting a mortgage during that time.
However, while it may make getting a mortgage with an IVA more difficult, there are certain lenders and mortgage deals that you may be able to access.
Certain lenders have created specific products which balance the risk of them lending to someone with an IVA with the potential returns they can generate. The trick is finding a mortgage broker who can help you navigate this confusing marketplace to find you the right deal. That’s where My Mortgage Pro can help.
What is a bad credit mortgage?
Bad credit mortgages are just like regular mortgages, but they have been designed specifically for people whose credit score has been impacted by things like late or missed payments, defaults, CCJs and even IVAs or bankruptcies. Because there is more risk involved for the lender, they tend to come with higher interest rates and stricter limits on how much you can borrow. That’s because the risk is mitigated by the higher interest rates and larger deposit you pay.
If your credit score is high, lenders will view you as less of a risk and so your chances of getting a regular mortgage, with lower interest rates, approved are higher. If your credit score is low, lenders will view you as riskier, meaning your options narrow.
There are many types of bad credit mortgages available, including fixed, variable, and discounted rates. The interest rate you’ll pay, and the amount you’ll be able to borrow will vary from lender to lender and will depend on your credit score.
How do I get a mortgage with an IVA?
If you have an IVA, the best rates and the number of mortgages available to you will be more limited. But, with the right support, you should still be able to find one that’s right for you. If you have an IVA, you will be considered as high risk by most lenders, and many won’t have that kind of risk appetite to approve your application.
However, certain lenders have created products for borrowers who have either got an active IVA or have been subject to one in the past. If you can demonstrate to the lender that you can afford the repayments and can manage your finances sensibly, you may still be able to access a mortgage with an IVA.
However, because of the increased risk involved, the interest rates are likely to be higher and you may even have to pay a larger deposit. The application process and lending criteria vary between different lenders, so you may need help in navigating the marketplace to find the right lender and the most appropriate deal, based on your circumstances. You’ll need to work with a mortgage broker with expertise in this field.
Contact us for more information about getting a mortgage with an IVA
My Mortgage Pro is a professional mortgage information service. While we don’t give advice, we aim to provide you with simple, jargon-free, no-nonsense information about mortgages to help you make the right choice. We can also connect you with a specialist mortgage broker from our parent company James Alexander FS who are authorised and regulated by the Financial Conduct Authority, who will provide advice tailored to your specific circumstances and help you find a mortgage with an IVA, fast.
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