We have been receiving a few enquiries from people who have had IVAs recently. This post will look at the options if you have or have had an IVA in the past.
What is an IVA?
Chances are if you are on this page you probably know what an IVA is, but an IVA is a form of Insolvency. It is where you make a formal agreement to make monthly repayments to your credits. As it is a form of insolvency it shows on your credit report in the same place as a bankruptcy would. However unlike a Bankruptcy an IVA will potentially allow you to keep your home should you be a homeowner. With a bankruptcy that is unlikely.
Getting a Mortgage with an IVA
Lets first have a look at people who are currently in an IVA. Is it possible to get a mortgage whilst party to an IVA? In short, the answer is yes. There are however a number of things to consider.
Firstly, if you have been in the IVA for less than 3 years, you will probably need a large deposit, anywhere from 30% upwards. There are only a couple of lenders who will consider you with less than 3 years in the IVA and they do insist on a larger deposit.
Secondly rate wise, because of everything going on in the current climate it is difficult to say where rates will be as it could be out of date by the time the article is posted. However, if you work on the assumption rates are likely to be around 2.5% to 3.5% above where the high street is, that should give you a good indication.
Looking at people who have been in the IVA for over 3 years, things do start to improve. There are a couple of high street lenders who may consider you. This opens you up to 95% mortgages potentially and at normal rates. However you need to bare in mind that on the high street you still need to pass a credit check. That is less likely at 95% LTV than it would be at say 85%.
In addition to the high street, there are also a number of smaller building societies who may consider you. Typically up to 90% LTV and also with relatively normal rates.
As mentioned above, in short the answer is yes. However we need to take into account the size of deposit, how long you have been in the IVA for, what your credit report looks like and affordability.
Getting an Mortgage after completing an IVA.
As above, I suppose the devil is in the detail with this. Some lenders will consider you based on when the IVA started. These are probably going to be the lenders who are most favourable. There are lenders who will consider you based on when the IVA finished. If it has been a while or you were in the IVA for a short period of time, these lenders may be able to step up and give you more options (and hopefully improved rates).
Summary
In short, we really need to look at the overall picture. If you have been in an IVA for 12 months and have a 10% deposit then it is unlikely. Whilst the devil is in the detail, something has to give. You typically either need a larger deposit or to allow some time to pass between the IVA starting and applying for a mortgage.
That being said, it is always worth a conversation. We can give you some direction and pointers if we do not think you are quite in a position to apply yet. Feel free to get in touch, we can talk your circumstances through and see what we can do.