It is possible to get a mortgage after an IVA. If the record is no longer on your credit file and you get the right advice a few high street lenders may now work with you.
Jump to article content:
- 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 it is best to wait until the record has come off your credit file (6 years from the start date). Once this has happened some high street lenders may lend to you.
Even after the record is off your file most high street lenders will still be unwilling to help. You should consider using a specialist mortgage broker who can identify those who will work with you.
You may have completed your IVA early and the record is still on your file. In this situation a specialist broker may be able to find an adverse lender who will lend. However such lenders will charge much higher interest than the high street.
If you settled your IVA early more than 3 years ago but the record is still on your credit file you may now be able to get a mortgage on a sensible interest rate. Contact us for further details.
What size of Deposit will you need?
The deposit you need for a mortgage after an IVA depends on how long it is since the Arrangement started. The longer you are able to wait the smaller deposit you will require.
After 6 years the record of the Arrangement will be off your credit file. Some high street lenders will now consider lending to you with a deposit of as little as 5%-10% of property value.
If the record is still on your file you may be able to use an adverse lender. However you will then be looking at a deposit of at least 25%.
Many high street mortgage lenders will still be unwilling to lend to you even after the IVA is off your credit file. As such using a specialist mortgage broker is recommended.
Looking for a mortgage after an IVA? Give us a call (0800 011 4712) or complete the form below to speak to one of our experts.
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 for your deposit. Given average house prices are around £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. Now your IVA is finished you should consider saving the amount you were paying into the Arrangement.
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?
With specialist advice you can get a mortgage after an IVA. As such this should not be a major concern when making your decision to use the solution or not.
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.
You can start an IVA in the knowledge that mortgage options will be available once it is completed and off your credit file.
Your home may be repossessed if you do not keep up repayments on your Mortgage or other loans secured upon it.