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Can You Get a Mortgage With an IVA

Written by, Marija Petkova

Updated September, 6, 2022

Mortgages can be tricky things. You need to have a good credit score, a steady job, and sometimes even a cosigner, to be approved.

But what if you’re struggling with debt? Can you get a mortgage with an IVA?

Keep reading to find out.

Can You Get a Mortgage With an IVA?

An IVA (Individual Voluntary Arrangement) is a formal agreement between you and your creditors that allows you to pay back what you owe at an affordable rate over a set period. 

An IVA can be helpful if you’re struggling to meet your debts, as it freezes interest and prevents lenders from taking any legal action against you.

Having an IVA won’t necessarily mean you can’t get a mortgage, but it can affect mortgage rates

You may have to put down a bigger deposit or pay a higher interest rate. An IVA also reduces your credit score, which could make it more difficult to get approved for a mortgage. 

What’s more, taking up a mortgage may put the IVA at risk since the agreement exists to help you get back on track with your finances. Any credit exceeding £500 that you wish to get while in an IVA requires prior written permission from your insolvency practitioner and, in some cases, your creditors. 

That being said, if you’re thinking about getting a mortgage while you’re still in an IVA, speak to your trustee or insolvency practitioner. They can advise you on the best course of action and may be able to help you find a lender who is willing to work with you.

Getting a Mortgage After an IVA

There are a few things you’ll need to do to get approval for a mortgage after an IVA. If you can meet all of these requirements, you should be able to get a mortgage after your IVA. 

  • Pay off your debts and meet all the terms of the IVA.
  • Prove that you’ve been making regular, timely payments for at least 12 consecutive months. This will show lenders that you’re now financially responsible and can be trusted to make mortgage payments on time.
  • Improve your credit score. If you defaulted on any payments during your IVA, this will likely have damaged your credit score. You’ll need to work on rebuilding your credit before applying for a mortgage.
  • Save up for a down payment. Lenders will often require a larger down payment from borrowers who have been through an IVA, so it’s important to start saving as soon as you’re discharged.

If you end up getting one, you can try to reduce the amount you owe by opting for an offset mortgage

Will I Need IVA Mortgage Lenders in the UK?

An IVA specialist mortgage lender is different from other mortgage lenders in a few key ways. They have extensive experience dealing with IVAs and know how to get the best results for their clients.

If you are considering an IVA, it is important to speak with an IVA specialist mortgage lender. You don’t necessarily need an IVA specialist to get a mortgage but they can help you understand your options and ensure that you get the best possible outcome for your financial situation.

How Does an IVA Impact My Mortgage Application?

The IVA can be a determining factor in whether you can get a mortgage, but it all depends on the lender. 

Some lenders view an IVA as a serious negative, and will automatically decline any mortgage application from someone who has one in place. Other lenders may be more willing to consider your application, but will typically require a larger deposit and/or charge a higher interest rate.

The good news is mortgage approvals have risen sharply after the pandemic, according to mortgage statistics.

If you’re hoping to get a mortgage, it’s important to speak to a lender about your specific situation and find out how they would view an IVA. This way, you can plan accordingly and make sure you’re in the best possible position to get the mortgage you need.

Bottom Line

Mortgages with an IVA are rare but, there are plenty of lenders that wouldn’t mind accepting an applicant that has one in place. If you’re considering applying for a mortgage, it’s best to talk to your lender about your specific situation and they will be able to advise you on the best course of action.

                           

Frequently Asked Questions And Their Answers

How long after an IVA can I get a mortgage?

You can get a mortgage with and right after an IVA, but lenders are more likely to accept your application once the IVA is no longer on your credit report.  The record of the IVA is removed six years after its completion.

Can I get a joint mortgage with an IVA?

The answer to the “Can you get a mortgage with an IVA” question is yes, including in cases where you’re applying for a joint mortgage. Lenders will evaluate the overall strength of the joint mortgage application if one candidate has an IVA, but your odds of getting reasonable rates will be substantially higher if it’s an old IVA on your file.

My name is Marija, and I'm a financial writer at DontDisappointMe. Although finance might not be everyone's cup of tea, my 10+ years of working in one of the biggest banks in my country, and my interest in extensive research on everything finance/investment-related, have made me somewhat of an expert in the field (if I do say so myself). No longer having the passion to work in a corporate setting, I decided that I couldn't let all of this knowledge go to waste so I started writing. And, here I am! Today I try to share my knowledge with my audience in the hopes of making this topic as simple and interesting as possible. In my leisure time, I like spending time with my family and travelling to new locations.