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Can I Get a Remortgage to Pay Back an IVA?


Can I Get a Remortgage to Pay Back an IVA?
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Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

Almas Uddin13 Dec 2023
    

What Is An IVA - Individual Voluntary Agreement?

An active IVA (individual voluntary arrangement) can make it very difficult to be approved for any credit, including mortgages.

Here we'll assess the options for remortgaging an IVA and whether it will continue to impact your credit assessment.

If you'd like tailored advice about repaying your IVA or finding mortgage borrowing, give the mortgage advisors team a ring on 0330 304 3040, or message us directly at [email protected].

Is it Possible to Get a Mortgage After Having an IVA?

Yes, it's certainly possible. A lot depends on when the IVA was registered, and the credit bureaus will remove them from your credit file after six years.

Each lender has its own criteria, so it is vital to apply to a mortgage provider who can accept mortgage applicants with issues such as defaults, CCJs or IVAs on their credit file.

They will consider whether you have kept up with the repayments, how long ago the issue occurred, and your current financial position. While in an IVA, you can find remortgages, use those funds to pay back the IVA balance, or remortgage when an IVA has been successfully repaid.

How Long Should I Wait After an IVA to Apply for a Mortgage?

It depends on your circumstances and how quickly you need a mortgage! Again, it all depends on the lender, so if you can wait until your IVA is removed from your credit file, you will achieve lower interest rates and more favourable terms.

Lender criteria can vary substantially:

  • Some lenders will not approve any mortgage applicant with any history of an IVA.
  • Others will lend if the IVA has been settled.
  • In some cases, you can get a mortgage within three years of repaying the IVA debt.
  • Specialist bad credit lenders can make an offer to remortgage and repay the IVA or mortgage a property with active IVA repayments ongoing.

In most cases, you will need a higher deposit if you have an ongoing IVA - usually around 30% or 40% of the property value. This also applies to remortgages, and you'll need a minimum amount of equity to qualify.

Can I Remortgage my Property with an IVA on my Credit File?

Your property assets are detailed in your IVA file, so you'll first need to check what the terms are. Property terms should be sent to you around six months before your IVA is due to finish, and this review will include:

  • A statement of your current mortgage liabilities.
  • Property valuation.

Remortgaging after an IVA is typically possible up to a maximum 85% Loan to Value ratio. The calculation works by reducing your property valuation by 15% and then deducting the balance still to repay on your existing mortgage.

That residual figure is the equity available for an IVA remortgage.

Can My Home be Repossessed as Part of an IVA?

No, an IVA protects your property, and you will not need to sell it or risk it being repossessed. An IVA usually requires you to pay back a fixed value every month, often for five years, and provided you keep up with those repayments, your home is not at risk.

Should you fall behind with your IVA repayments, there is a possibility of being declared bankrupt, in which case you could risk your home being repossessed.

Am I Allowed to Sell My Property Whilst in an IVA?

Yes, you might decide to help resolve your debt problems by selling your property and downsizing. However, it is essential to think about all of the associated costs such as Stamp Duty, relocation costs, legal fees and valuation costs to determine whether it is worthwhile.

If your creditors arranged your IVA, you would usually pay a static value each month for around five years, and your property would need to be valued in the final repayment year.

Should you have enough equity in the property to cover the loan's balance, you could be asked to remortgage to release that equity and pay back the balance - if not, you usually continue with the monthly payments for a further year.

You can sell your home at any point when the IVA is complete, although we'd recommend holding off until you have the IVA completion certificate. You will usually be removed from the Insolvency Register three months after receipt of the certificate.

How Can I Get Approved for a Mortgage After Being in an IVA?

The process depends on the lender, and each will use a different credit agency or combination of agencies to evaluate your credit situation and make a decision.

We always recommend accessing your credit files before making any applications to ensure these are up to date and do not contain any errors.

If you need a mortgage after an IVA, the best option is to consult an independent broker with bad credit mortgages lending experience. We negotiate terms and rates on your behalf with the lender and ensure you only apply to mortgage providers who have a good chance of approving your application.

Professional Advice for Remortgaging to Repay an IVA

Suppose you're coming to the end of your IVA and are looking at remortgaging to repay the debt balance. In that case, a specialist bad credit broker is undoubtedly the best way to secure competitive rates to minimise the debt repayment cost.

Give the Revolution team a call on 0330 304 3040, or email us at [email protected] to arrange a good time to talk.

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FCA disclaimer

The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature.

We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.