It is possible to get a mortgage after an IVA has finished. Depending on your circumstances some lenders are offering up to 95% loan to value mortgages. However you will need the help of a specialist mortgage broker.
- How to get a mortgage after an IVA
- What size of deposit will you need?
- How to save for your deposit
- Should you avoid an IVA if you want to get a mortgage?
How to get a Mortgage after an IVA
The main problem with applying for a mortgage after an IVA is your poor credit rating. Because of this even if the record has already come off your credit file it is likely you will still have to use an adverse mortgage lender.
Generally speaking you cannot approach this type of lender yourself. You need the help of a specialist mortgage broker. They will identify one which is suitable for you and help you apply.
Adverse lenders charge a higher rate of interest than high street lenders. However you will not have to pay this rate for ever. You will normally be able to remortgage to a better deal after 2 years.
If you are looking for a mortgage after an IVA speak to us and we can put you in touch with a specialist broker.
What size of Deposit will you need?
The deposit you need to get a mortgage after an IVA depends on how long it is since the Arrangement started. The longer you are able to wait the smaller the amount you will require.
If you completed your IVA early and it is still only 3-6 years from the start date there are lenders who will consider you. However you are likely to require a deposit of 25% of the value of the property you are looking to buy.
After 6 years when the record of the Arrangement has come off your credit file more lenders become available. After this time you may be able to put down a deposit of as little as 5%.
After the record of your IVA has come off your credit file most high street mortgage companies will still be unwilling to lend to you. It is therefore likely you will still have to use an adverse lender.
How to save a Deposit for a Mortgage after an IVA
If you are not already a home owner one of the major obstacles you face is getting together the cash you need to pay your deposit. Given average house prices are £200,000 you will need at least £10,000.
Unless you have friends or family who can help the only way you are going to be able to get this money together is to save it. The good news is that your IVA is finished and so the amount you were paying is now available to save.
You have been used to paying your IVA for the last 5-6 years so all you need to do is keep saving the same amount each month. You can also save any extra money you are able to earn.
If you were paying £250 a month into your IVA you could now save this money. In three years you will have saved nearly £10,000.
Should you avoid an IVA if you want to get a Mortgage?
You can get a mortgage after an IVA is finished. As such you should be too concerned about this when making your decision to use this debt solution.
You may have read or been told that if you want to get a mortgage in the future you should avoid an IVA and use an Informal Debt Management Plan. This is not the case. It is unlikely to be any easier to get a mortgage after a DMP.
All debt solutions will affect on your credit rating and make getting a mortgage more difficult. Given this you should first choose the solution that best helps you to resolve your debt problem.
If an IVA is the best debt solution for your situation you can start it in the knowledge that mortgage options will be available once it is completed.
Your home may be repossessed if you do not keep up repayments on your Mortgage or other loans secured upon it.