Can You Get a Mortgage with an IVA?

When considering a range of options around debt management, one of the factors to consider is how the insolvency solution you choose will affect both your personal and professional life. IVAs are a great solution for many individuals seeking a way to fairly repay creditors without facing personal hardship.

Having a roof over one’s head is a basic human necessity, so the question arises does IVA affect mortgage options?

Is it Possible to Get a Mortgage with an IVA?

Can you get a mortgage with an IVA? Let’s break this down further, and look at both IVA and mortgage. An IVA is an individual voluntary arrangement for someone with two or more creditors, which is proposed by a nominee (insolvency practitioner) and must be accepted by at least 75% of creditors.

It is a long-term way of repaying debt to all creditors through an agreed monthly amount (+ fees) that is disbursed by the insolvency practitioner. The debtor must disclose all of their income sources (including any ‘windfall’ amounts such as redundancies, inheritance, or wins). The IVA is then put in place to repay creditors while the debtor can continue to live their life without hardship.

In brief, that’s an individual voluntary arrangement. Mortgage on the other hand, is an agreement to repay a loan (usually a substantial amount) over time in order to purchase a property, with the property acting as equity for the loan. A deposit is generally required, the smaller the deposit raised, the greater risk to lenders to supply the remainder of the cost of the property.

Can you get a mortgage with an IVA? Being approved for a mortgage generally requires a good credit score and proof that you are able to afford mortgage repayments. In assessing any prospective home loans, part of the due diligence any lender is likely to perform is a check of the Insolvency Register, which includes records of bankruptcies, debt orders and IVAs. Mortgage lenders are very unlikely to approve a home loan to someone who has an IVA.

Further to that, if you’re considering applying for a mortgage with IVA in process, the debtor is required to gain approval from their nominee (insolvency specialist) for any purchase over £500. Such a request in relation to taking out a mortgage with IVA would raise questions for the insolvency practitioner and creditors as to how the debtor managed to raise a deposit while on an IVA, and ‘whether it was the outcome of a windfall or money kept hidden from lenders’.

A final consideration for can you get a mortgage with an IVA, is the final year of an IVA requires any home owners to release equity from their home to help repay as much as possible of the outstanding debt before the remainder is written off. If you’ve just taken out a mortgage with IVA, you would be required to refinance your mortgage to release equity to your creditors. Something any lenders would be aware of when considering an application for a mortgage with IVA.

How Long After an IVA can I Get a Mortgage?

If you can’t get a mortgage with an IVA, is it possible to get a mortgage after IVA?

Yes, you can get a mortgage after your IVA is completed, but there are things to consider that impact how long after an IVA you can get a mortgage. The record of your IVA will commence at the start of the IVA and continue on the Insolvency Register for six years or until three months after your IVA is completed. Applying for a mortgage within that time could make it less likely for approval from a lender. While your credit rating should start to improve once your debt is paid off, it may still take a considerable amount of time to save a deposit for a mortgage after IVA is completed.

Can I Get a Joint Mortgage With an IVA?

There are the same factors to consider when applying for a joint mortgage with an IVA. While your partner’s credit history may improve your chances of getting a loan, you still need approval from the insolvency practitioner and would need to be able to afford the mortgage repayments after the monthly payment for the IVA.

How Can Irwin Insolvency Help with Your IVA and Mortgage Concerns?

To understand all the implications of IVA and mortgage options for your unique circumstances, contact Irwin Insolvency today for professional and tailored advice. Let Irwin Insolvency assess your circumstances and guide you towards a debt-free future.

Find out more about Individual Voluntary Arrangements (IVA)

What is an IVA?

What is the IVA register?

How to apply for an IVA

IVA pros and cons