Although an IVA will put a strain on your credit and thus your borrowing potential, it does not prevent you from getting a mortgage for a property.
Unlike bankruptcy, you can get a mortgage or a re-mortgage for your home, whether you are in an IVA or have previously been in one.
What is an IVA mortgage ?
The term IVA mortgage is generally used to refer to; the process of taking out a re-mortgage in order to meet the final payment as arranged in the IVA agreement. In other words, this is an IVA Re-mortgage.
IVA mortgage can also mean applying for a mortgage while within an IVA or having had one recently. This may also be referred to as Mortgage with IVA.
When you set up an IVA, some creditors may include a clause that stipulates that after a certain number of years, some of the equity in your home will need to be released as a final payment to the creditors.
In this case you will be limited on when to re-mortgage, however, this does not mean that you can't get a good deal on an IVA mortgage, you will just need to shop around. Your Insolvency Practitioner can usually suggest some lenders.
Mortgage with IVA
If you are looking into mortgage rates during an IVA or soon after insolvency, you will be subject to high interest rates because lenders will consider you a risk. IVA mortgages also require a higher than normal deposit due to the level of risk.
To avoid paying high interest, ideally you should allow as much time as possible between the IVA and a mortgage application as possible. This allows your credit rating to recover considerably.
If you cannot wait then you can contact a sub-prime mortgage broker who will know a number of lenders who specialise in mortgages with IVA. Using a mortgage broker will most likely increase the costs due to broker charges; therefore it might be better to approach the lender directly.
It is important to remember that time also plays an important role here. The longer you wait after the IVA, the less interest you are likely to pay on the mortgage.
Are you eligible for an IVA ?Try our simple debt solution calculator to find out.
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