Can You Get a Mortgage With An IVA?

What is an IVA?

An Individual Voluntary Arrangement (IVA)* is a legally binding agreement between you and your creditors to repay all or part of your debts. Typically lasting for up to five years, your IVA payments are made monthly to an Insolvency Practitioner who divides this money between your creditors.  

IVAs are typically used to repay unsecured debts, such as: 

• Credit cards

• Bank overdrafts

• Personal loans

• Utilities and Council Tax arrears

• Money owed to HMRC

Debts secured against your property, like a mortgage or other secured loan, and other financial commitments, such as student loans or child support, can’t be repaid using an IVA. 

The Insolvency Practitioner contacts the creditors on your behalf to get their agreement for the IVA to start. If there’s multiple creditors, the one(s) holding 75% of your outstanding debt must agree to the IVA for it to be put in place. 

The monthly payments into an IVA are based on what you can afford, and any leftover debt is written off at the end of the term. As long as you keep up with your repayments, an IVA prevents your creditors from taking any further legal action against you for your debts. If you fall behind with the repayments, your Insolvency Practitioner can cancel the IVA and recommend bankruptcy. 

Does an IVA affect your credit score?

Yes, it does. An IVA is seen as one of the more severe forms of bad credit and will reduce your credit score whilst it remains on your record. This will make applying for further credit, such as a mortgage, more difficult but not impossible. 

With a smaller group of lenders available, if you can secure a mortgage, the interest rates and size of the deposit required will likely be higher than for someone with a perfect credit score to cover the perceived additional risk for the lender. 

How long does an IVA stay on your credit file?

An IVA remains on your credit record for six years from the date it’s first registered. Once the outstanding debt has been repaid, it will be marked as' complete', but it will still stay on your report and affect your credit score until the six years have passed.  

Can you get a mortgage with an IVA?

Yes, it’s possible. Although most high-street lenders will likely reject you for a mortgage with an IVA on your Credit Report, plenty of specialist mortgage lenders will accept applicants after an IVA debt has been fully repaid and discharged despite it still showing on your record. 

These specialist lenders are only usually available through a mortgage broker. So, your chances of getting a mortgage after an IVA will be far greater if you speak with a broker - like us! - who already knows which lenders can accept applications for this type of credit issue. 

How long after an IVA can I get a mortgage?

This varies from lender to lender. For almost all mainstream lenders, it can take until the IVA is removed from your credit history before you can get a mortgage. But, there are specialist lenders who will accept you for a mortgage with a satisfied IVA still registered on your record. 

Most high-street banks and building societies will see an IVA on your Credit Report as an immediate red flag and reject your application. Rather than adopting a ‘computer says no’ approach, specialist lenders apply more of a human touch and use their expertise with bad credit issues by assessing applications on a case-by-case basis. 

For IVAs, this means looking more closely at:

• When the IVA was first registered

• How long it's been since the IVA was fully repaid and discharged

• What were the circumstances surrounding the IVA initially

In addition to your credit score, a specialist lender will also take into account all other aspects of your application before reaching a decision, such as: 

• Your age

• Employment record

• How you’ve managed your finances since the IVA

• Your income and outgoings

• The size of your mortgage deposit

• The type of property you’re looking to buy

If you’re looking to get a mortgage with an IVA, it’s wise to speak with a mortgage broker before approaching a lender directly. 

If you contact us, we’ll arrange for one of our Mortgage Experts, who has experience helping people in the same situation get the mortgage they need, to contact you and look at how we can help you, too. 

Will an IVA affect my current mortgage?

No, if you already had a mortgage before taking an IVA to repay other outstanding debts, it won’t have any negative effect. However, the Insolvency Practitioner might instruct you to release some of the equity in your property to help repay the debt. 

At some point, an IVA could affect your chances of securing the most competitive remortgage deals if it shows on your credit record when your current deal is ending and you’re looking to renew your existing arrangement. 

If you’ve had an IVA since initially taking out your mortgage, it’s strongly recommended that you plan well ahead, at least six months before your existing deal comes to an end, and speak with an experienced bad credit mortgage broker to discuss your options. 

How to improve your chances of getting a mortgage after an IVA

If you want to get a mortgage and still have an IVA on your credit record, you can do several things to give yourself the best chance possible. These include:

• Repay your IVA debt and get a completion certificate. If you haven’t fully repaid the debt owed to your IVA, this is the first step to take. Only with a satisfied IVA will you have any realistic chance of getting a mortgage from any lender. Once you’ve made your final payment, you should receive a completion certificate in the post from your Insolvency Practitioner. If you haven’t received one after a couple of months, you can follow up with the court to ask when you’ll receive it. 

• Download your Credit Reports**. If you’ve only recently received your completion certificate, you should check your credit record to confirm it now reflects that your IVA has been marked as ‘complete’. 

• Take time to rebuild your credit score. Once you’ve completed your IVA, you need to be patient and spend time repairing your credit score before attempting to apply for a mortgage. Most lenders will want to see a steady financial record of at least 12-24 months since the IVA was repaid. Positive steps include checking you’re registered to vote at your current address*, paying all your bills on time and repaying any credit cards every month. 

• Save for a deposit. Once you’re free from your IVA repayments, you can focus on saving up for a mortgage deposit. The more deposit you have, the stronger your application will look to more mortgage lenders. 

• Speak to a mortgage broker who specialises in mortgages with an IVA. Seeking advice from an expert rather than approaching a lender directly is the right move, particularly in cases involving an IVA. They’ll be able to advise you on how to prepare your application and which lenders will be most likely to accept it. 

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Which mortgage lenders will accept applicants with an IVA? 

Several specialist mortgage lenders will accept applications from people with a satisfied IVA still registered on their credit file. These include (but aren’t limited to) Aldermore, Bluestone Mortgages, Pepper Money, and West Bromwich Building Society. 

All of the above mortgage lenders work exclusively with brokers and have a proven track record of success in helping applicants with this type of credit issue. 

If you make an enquiry, one of our Mortgage Experts will be able to assess your current situation and offer guidance as to which lender is best placed to help you get the mortgage you need. 

Can you get a mortgage with an unsatisfied IVA?

It’s doubtful you’ll be able to get a mortgage while still making payments to an IVA. Most, if not all, mortgage lenders would see this as too big of a risk. Also, your Insolvency Practitioner would typically have placed restrictions on the amount of credit you’re allowed while the IVA is still unsettled (usually up to a maximum amount of £500).  

The terms of the IVA would likely state that any disposable income over and above what’s required for your day-to-day living expenses should go towards repaying your outstanding debts.