What is an IVA?
An Individual Voluntary Arrangement (IVA) is a formal agreement with your creditors to repay all or part of your debts. You make payments to an insolvency practitioner, who then distributes the funds to your creditors. The insolvency practitioner will create a payment plan tailored to your income, and the IVA must be approved by a court and recorded on the Insolvency Register.
Once your IVA is accepted by your creditors, any additional charges and interest are frozen, and creditors cannot demand payments from you during the IVA. Typically, any remaining debt after the IVA period is written off, and the IVA record is removed from the Insolvency Register.
Can I get a mortgage after an IVA?
Yes, you can get a mortgage after an IVA. Some lenders may accept you while the IVA is active, but most prefer that you have been discharged. Key factors lenders consider include whether your IVA is ongoing and how long ago it was discharged. Waiting six years after discharge can make obtaining a mortgage easier, but it is possible to get one sooner.
Ongoing IVA
You can get a mortgage with an ongoing IVA, but only a few specialist lenders will consider you. With fewer lenders to choose from, interest rates may be higher. Lenders will check if you have made your IVA payments on time. If you are in arrears, getting a mortgage will not be possible. You also need to be at least one year into your IVA for lenders to assess your payment history.
Discharged less than three years ago
If you were discharged from your IVA less than three years ago, you can still get a mortgage, but you will need a specialist lender and likely face higher rates and fees. If you can afford higher rates, getting a mortgage soon after discharge can be beneficial, as you can switch to a better rate after three years. If you are close to the three-year mark, it might be better to wait, as more lenders and better rates will become available.
Discharged between three and six years ago
Three years after your IVA discharge, getting a mortgage becomes easier. While you may not have access to all lenders, you will have more options than if you were discharged less than three years ago. Demonstrating that you settled your IVA will also be advantageous.
Discharged over six years ago
Once six years have passed, your IVA will no longer appear on your credit file, making it easier to get a mortgage. You will have many lenders to choose from, including some high-street lenders. However, not all lenders accept applicants with a past IVA, even if it is over six years old. You must still disclose your IVA history to your mortgage advisor and lender, as failing to do so can cause issues during your application.
How does an IVA affect a mortgage?
An IVA will impact your mortgage application as it appears on your credit file during a credit check. Lenders will see the registration date, end date, and your payment history. Most lenders do not accept IVAs as part of their criteria, and if they do, they will check how long you have been discharged. Having an IVA usually means higher mortgage rates compared to applicants without an IVA. However, six years after discharge, the impact lessens significantly.
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