IVA Loans

If you are in an IVA you may need extra cash. If you have already completed your Arrangement you might be wondering if and when you will be able to borrow or apply for a Mortgage.

Included in this article:

• Can you get a Loan during an IVA?
• What if you have a Financial Emergency?
• Getting a Loan after your IVA has finished
• Get a Mortgage during an IVA

Can you get a Loan during an IVA?

Generally speaking it is very difficult to get a loan while you are in an IVA. The main reason is that your credit rating is poor. If you apply to a High Street lender you will fail their credit check and the loan will be refused.

One option you might consider is borrowing from a Payday or Doorstep lender. These lenders offer cash loans to people with bad credit. However you should avoid this for two very good reasons.

Firstly borrowing more is against the terms of your IVA. Secondly if you borrow from a Payday lender you are unlikely to be able to repay the new debt without missing your Arrangement payments. If you try and cut back on your living expenses you will leave yourself short and again your Arrangement payments will be at risk.

If you have taken a Payday or Doorstep loan during an IVA you might be allowed to add the new debt to your Arrangement. However this is by no means guaranteed.

What if you have a Financial Emergency during an IVA?

If you find yourself in an financial emergency during your IVA rather than thinking about getting a loan speak to your IVA company. They may be able to help you take a payment break.

This would allow you to suspend your payments for a few months. You can then use this cash to pay for the emergency that has come up.

Alternatively you might be able to cover the emergency with money you have saved during your IVA. It is important to try and set aside something each month so you have money to fall back on when you need it.

Try to save during your IVA so that you have cash available to pay for living expenses such as car repairs which will only come about once or twice a year.

Getting a Loan after your IVA has finished

Once your payments have finished and your IVA is completed you are free to borrow again. However it is not usually possible to apply for a loan straight away. This is because your credit rating is still likely to be poor.

The record of the Arrangement does not come off your credit file for 6 years from the start date. This is the case even if it was completed earlier. While the record remains on your file your credit rating will not start to improve.

Once the record comes off your file your credit rating will beging to get better. However it will take time to repair. As such it is likely that you will have to wait a while longer before you can successfully apply for a bank loan.

It is possible to get a mortgage as soon as your IVA is completed whether or not the record has come off your credit file.

Can you get a Mortgage during an IVA?

Normally you will only be considered for a mortgage during an IVA if you are already a home owner. The purpose of the mortgage will have to be specifically to raise funds to settle the agreement early. You will not be able to release equity to just spend on other things.

If you are currently renting and want to buy a property you will have to wait until your IVA is completed. There are no lenders who will consider you while the Arrangement remains in place.

Once the Arrangement is over buying a property then becomes an option. However in order to get access to high street interest rates you will have to wait until the record comes off your credit file.

Need more advice about remortgaging to pay your IVA early? Call 0800 011 4712 or complete the form below.