How Would An IVA Affect My Current Mortgage?

If you have an existing mortgage, your mortgage provider will still expect to receive payments in full every month. At the same time, creditors also expect to receive their contractual IVA repayments in full too.

This can be quite stressful, which is why the value of your home can sometimes be taken into consideration when setting up an IVA.

Usually, in these cases, a valuation of your property will need to be undertaken. This helps to find out if there is an advantageous proportion of equity left in your home that could be freed. Simply put, equity is the difference between your home’s market value and the outstanding balance that is left on your mortgage.

If a considerable amount of equity is found, then you may be required to remortgage your property six months before the end of your contract. This helps to raise a lump sum of cash which can be contributed towards your repayments. It is important to note that this will only be considered if there is at least £5,000 worth of equity, or more, in your property.

If you don’t have the means to remortgage, or if it would be too costly for you to do this, then your monthly IVA payments may go up, increasing the contract period by at least a year. For any advice regarding your payment amount or contract period, please call our friendly team on 0800 464 7235.

Can You Get A New Mortgage In An IVA?

Whilst in the midst of an active IVA, repaying your debt will be the number one thing on your mind. However, with that being said, life doesn’t have to stop just because of your financial circumstances. Keeping up with payments and sticking to the agreements of your contracts can help you to clear your name faster so you can get on with other things.

Whilst it is possible to get a new mortgage in an IVA, it’s not as easy as it sounds. Finding mortgage lenders could prove to be a challenge and there will be many obstacles to overcome. This is because the whole point of getting into an IVA is to clear any debts from your credit report and taking out a mortgage can add additional finical strain to the situation.

It is important to note that any credit over £500 which you would like to take out while you are in an IVA requires prior written approval from your insolvency practitioner and, in some cases, your creditors.

An IVA affects your credit history and your credit score which are two of the most important factors that can get mortgage lenders to accept your application. There are specialist IVA mortgage lenders out there who may make the idea of purchasing a home in the midst of repaying debt more realistic, but there are still factors that you will need to consider.

• You will need to ask your insolvency practitioners advice permission before applying. They will take into account your financial situation and credit rating before advising you on taking out a mortgage with an IVA.
• It’s a given that higher interest rates come as a standard part of IVA mortgages. This means you will have to pay higher interest rates than an applicant with a better credit score. Most high street lenders see an active IVA as a risk and try to avoid it by skyrocketing interest rates.
• A larger deposit is also usually required. A mortgage lender will feel more reassured that you can pay your monthly instalments on time if you put in a larger sum of cash to begin with.

Whilst a specialist mortgage lender may provide a glimmer of hope and promise to consider your mortgage application with an IVA (in contrast to high street lenders who will most likely reject it straight off the bat), it’s really important to be cautious.

Specialist mortgage lenders understand that they are managing a restricted customer base and may offer you an easier way to get a mortgage, even with a poor credit history, but you could still face similar problems such as higher interest rates.

It’s always best to seek professional advice before applying for a mortgage with an IVA. Give us a call on 0800 464 7235 today to receive financial advice that you can trust.

Should You Wait Until After An IVA To Get A Mortgage?

The chances of securing a mortgage during an IVA are slim, so it’s probably best to wait until you have finished your contractual agreement before applying.

Once lenders see that you no longer owe money to creditors, they are much more likely to offer you better deals and approve your application. This is because once your legally binding agreement ends, you are free of any unsecured debt and you are able to spend your disposable income as you wish.

How long should you wait before applying?

Although you may want to apply for a mortgage after an IVA straightway, and of course you can do so, it may be a good idea to wait for a little while.

By waiting for a year or two, you can give your credit report a chance to recover which in turn provides you with many benefits including lower interest rates, lower deposit demands, and less chance of rejection.

The good news is that the number of lenders who are offering post-IVA mortgages are going up. By waiting long enough for your IVA to be three to five years old, and having maintained all your payments within that time period, you can provide valid evidence that you are financially trustworthy and trying to improve your credit history for a better future.

Reach Out To IVA Helpline Today For Friendly Advice On IVAs And Mortgages

Whether you are currently in the midst of an IVA or have recently completed the time period of your contract, we are here to help you move forward with your life.

Here at IVA Helpline, we offer many services that can allow you to take the right steps to a better and brighter future. From helping to rebuild your credit rating to various debt repayment services to support about IVAs, we are here to help.

Contact us on 0800 464 7235 today to speak to one of our friendly advisers who will be more than willing to offer any information or support you need for your debt solution.