How to Get a Mortgage After an IVA?

Although an IVA can be a great help for getting you out of debt and your finances on the mend, it can cause problems when it comes to getting a mortgage further down the line. As we hope to show you from the following post, it is still possible to get a mortgage even after an IVA, even if it is trickier.

How Does It Affect Your Chances of Securing a Mortgage?

If you are still paying off an IVA and are looking to buy a home and secure a mortgage, you will have a very difficult time. The reason being, the creditors you owe money to will, justifiably, want to know how you are able to afford the price of a home and mortgage repayments when you are still paying off debt, while potential mortgage companies will probably not want to lend money to an individual who is already dealing with huge debts.

You will be in a much better position to secure a mortgage, though, if you have met the IVA terms fully and successfully.

What About After The IVA is Settled? Can You Get a Mortgage?

You have much better chances, in general, if you have settled your IVA, and are trying to secure a mortgage. However, you should know that there are some lenders who will refuse applicants who’ve had IVAs in the past. Others, still, may lend only after 6 years, once the IVA has been automatically removed from your credit report. 

Don’t despair though, as there are a reasonable number of lenders out there who will still lend money for mortgages to applicants who have had IVAs that are 3 years old or more. As long as they have been settled fully and, in the time, since have worked hard to build up your credit score and keep up with any payments you are required to make to other lenders.

If this is the situation you find yourself in, you may be expected to put down a bigger deposit or agree to higher rates of interest on the mortgage. Especially compared to people who have not had IVAs and have cleaner credit reports.

It may be worth your while even, hiring a mortgage broker to help you get a mortgage if you’ve had an IVA in the past.

What Kind of Deposit May You Need If You’ve Had a Past IVA?

The amount of deposit you will be required to save and put on a property to secure a mortgage if you’ve had an IVA in the past, will normally depend on how long ago you settled the IVA. As noted earlier, an IVA completed disappears from your credit history after 6 years and that could mean you are able to be accepted for a mortgage with a small 5% or even 10% deposit. 

If your IVA, though, was only settled within the last 3 to 4 years, lenders may require higher deposits of between 15 and 25%. Why? Because you are considered to be a higher risk for mortgage companies to deal with. There’s also the fact that when you want a big mortgage, the property value could be lower than the mortgage, which is referred to as negative equity.

Which in turn means if you did not keep up with the repayments and the home was repossessed, there is a chance they wouldn’t recover the loan in full.

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