Obtaining a mortgage is a significant milestone in one’s life. Anyone contacting a mortgage firm will have to jump through some hoops, but getting a new mortgage is significantly more difficult for people who are currently in an IVA. This article will give the answer to the question, “Can I get a joint mortgage with an IVA?” It will also serve as a guide on how to pick a good IVA mortgage lender and provide IVA mortgage expert reviews.
Let us start with a brief introduction of what an IVA means…
What is an IVA?
An Individual Voluntary Arrangement (IVA) is a legally enforceable arrangement between a person and their creditors—anyone to whom they owe money—to repay their debt. IVAs are operated by an insolvency practitioner or debt expert who negotiates with your creditors to combine all of your debts into a single; manageable liability. After that, instead of having to juggle multiple loans, you only have to make one monthly payment. The payment plan is spread out over 5 or 6 years; with any outstanding debt written off at the end.
An Insolvency Practitioner (IP), a skilled debt professional who will operate on your behalf, will set up an IVA. It is the IP’s responsibility to set up the agreement, engage with creditors, pay them throughout the arrangement; guarantee that payments are made to the correct lender at the appropriate time.
Can I Get a Mortgage With an IVA?
You can apply for a mortgage after an IVA; it may improve your chances of getting approved. Obtaining a mortgage while under an IVA might be challenging. Because of the nature of the agreement; you are legally obligated to pay as much money as you can reasonably afford toward your debt repayment.
Although persons in an IVA naturally devote the majority of their attention to repaying debts; during the course of their agreement, their lives do not come to a halt. People in an IVA want to pay off their debts and rebuild their credit so they can go on with their lives; including buying a property.
While getting a mortgage with an IVA is achievable, there are challenges to overcome. IVAs, like all debt solutions, have an impact on a person’s credit score. As a result, finding a mortgage broker who will lend to you may be difficult.
Getting a Mortgage With an Active IVA
If you wish to take out a mortgage or remortgage while you have an active IVA; you should contact your insolvency practitioner first. During that time, they have complete authority over your finances, including any new credit agreements worth more than £500. They may allow you to apply for a mortgage if they believe you can afford it; if you have kept up with your IVA repayment plan.
You’ll need to do the following in this situation:
- Find an IVA mortgage lender who will work with you if you have an active IVA. Because they are few and far between; it is worthwhile to use an experienced independent mortgage broker who can assist you through your alternatives; offer you access to intermediary-only options.
- Accept the fact that your APR will be much higher than a regular mortgage. Indeed, if you have the opportunity to wait, your mortgage will be significantly less expensive after three years of an active IVA; or even better, after the IVA has ended.
- Make sure you have a sufficient amount of cash on hand. To compensate for the higher risk of lending to someone who has an IVA; IVA mortgage lender will normally require a bigger deposit, which might be as much as 25% of the property’s worth.
Getting a Mortgage When You Have Had an IVA in the Past
Because the IVA will be removed from your credit file after 6 years; your chances of being approved for a mortgage will greatly improve. You should be aware, however, that IVA mortgage lenders will frequently inquire about your longer-term credit history; you may be required to disclose items such as CCJs, IVAs, or bankruptcy.
Your credit score is also likely to remain low for some time after the IVA is completed; implying that you will need to use a specialized lender; may also benefit from utilizing a whole-of-market mortgage broker to assist you in locating the best rates for your needs.
How Can I Improve My Chances of Getting a Mortgage After Having an IVA?
While the influence of the IVA on your credit file will diminish over time; it will be deleted entirely after 6 years. Credit scores will almost certainly have been harmed by both the IVA; the mishandled lending that led up to it.
Also, make an effort to raise your credit score with the major credit reporting agencies. Minimize the number of credit cards and other credit products you apply for; make sure you keep up with any credit agreements you’ve taken out since your IVA was satisfied.
If at all possible, try to keep your situation stable. Staying in the same job or living in the same home, for example, will improve the perception of your application.
If you can put off buying a house; you may be able to get better prices as you distance yourself from your bad credit history. It also gives you more time to save up a larger deposit; increasing your chances of being approved for a better mortgage package.
Can I Get a Joint Mortgage with an IVA?
Although some lenders will examine the overall strength of a joint mortgage application if one of the applicants has an IVA; If the IVA is historic, your prospects of acceptance and earning favorable rates will substantially improve.
Lenders will conduct financial viability and affordability stress tests on the couple as a whole when examining a joint mortgage application for a joint mortgage with an IVA. This means that the IVA will have the same effect in most cases as it would in a single case.
If one of the partners has an IVA; it may be possible to apply for a mortgage as a lone applicant rather than as a joint applicant for a joint mortgage with an IVA. However, many lenders require married couples; or those in a civil partnership to apply together when opting for a joint mortgage with an IVA.
How an IVA Impacts Your Mortgage Application
Your credit report is one of the factors mortgage lenders use to decide whether, or not to approve your loan application. Although an IVA on your credit record indicates that you have had financial difficulties in the past; it can also indicate that you are responsible and have made apologies.
In this regard, an IVA is far less damaging to your chances of getting a mortgage than a full bankruptcy.
All mortgage lenders work by estimating the level of risk you represent; they reject applications where the benefit of taking out a home loan is insufficient to justify the danger.
Understanding the Risk You Present with an IVA
Mortgage lenders examine many areas of your finances as part of your application; the following are the most important:
- Your credit history
- Income
- Your affordability
- The required loan-to-value (LTV) of the mortgage applied for
#1. Your Credit History
In the Uk, your credit history goes back six years; time is a powerful ally when it comes to determining your credit score. If your credit report is in good shape after your IVA, it’s mostly a matter of time.
If this is the case, it may be worthwhile to wait a bit longer for a good rate; and mortgage offer. It was three to four years ago, right? Surprisingly, they consider you similar to a consumer who has no IVA on their credit report at all.
It is even possible to acquire a mortgage contract while an IVA is in progress in some cases.
#2. Income
Income has a strong link with your mortgage agreement, setting the size of any accessible loan; and playing a significant role in overall approval. It goes without saying that the higher your income; the more steady your work, the better your chances of acquiring the mortgage you need, but those aren’t the only factors to consider.
Following an IVA, you’ll need to find a specialized IVA Mortgage lender prepared to look at your application on a case-by-case basis; these lenders are also more knowledgeable of and able to evaluate complex revenue streams. This includes the following:
- The self-employed
- Limited company directors
- Contractors
- Agency workers
- People with multiple income streams
- Those on low incomes
You must be able to show a regular amount of money that can readily support the mortgage repayments; regardless of how you receive your income.
#3. Your Affordability
Any mortgage application must include a section on affordability. We see this as disposable income at its most basic level; the sum of money left over at the end of the month after removing all of your expenses and regular outgoings.
Lender subjects finance to a stress test. This test determines if you might afford your mortgage in more challenging times, such as if interest rates rise. It’s not enough to be able to make your mortgage payments each month; you must also demonstrate that your finances can support the mortgage if your circumstances change.
#4. The required loan-to-value (LTV) of the mortgage applied for
The size of the loan in relation to the property value is a crucial aspect when taking out a mortgage. This is stated as a percentage and is known as the LTV (loan-to-value) ratio. Most mortgage lenders will consider loans up to 95 % LTV for consumers with good credit; however, this amount will be reduced once your IVA is taken into account.
LTV is the best option tool available to the lender. When you get a mortgage, you put your house up as collateral for the loan, and if you don’t pay back the loan; the mortgage lender has the right to repossess and sell the house to recoup their losses.
When the LTV is low, they have a far better chance of recouping their losses; however, a high LTV mortgage may make it impossible for them to recoup their investment.
IVA Mortgage Lender
The Financial Conduct Authority (FCA) has appropriately authorized; regulated specialized IVA mortgage lenders to offer secured mortgage loans to customers with a bad credit history.
They can conduct a thorough IVA mortgage expert review of your application; issue a mortgage offer without having to adhere to the stricter criteria used by many traditional lenders.
IVA Mortgage Expert Reviews
IVA mortgage expert reviews are annual reviews; which is a good time to reassess your finances and make sure they’re still manageable in your present situation. Many individuals are apprehensive about an IVA mortgage expert review; which involves a thorough examination of their finances, but there is no need to be concerned. In fact, it may benefit you in terms of payments and ensuring that you are on the proper track.
FAQs
Can someone with an IVA get a mortgage?
yes, it is feasible to obtain a mortgage following an IVA. Specialist lenders may be able to offer you some competitive rates even if you are not eligible for the lowest mortgage rates. Obtaining a mortgage following an IVA is a difficult task.
How long after an IVA can I get a mortgage?
You can get a mortgage after an IVA, but you won’t be able to get one until the IVA is removed from your credit report. It will do so six years after your IVA was agreed upon, or when your IVA is completed if it takes longer than that.
