It’s still possible to get a buy-to-let mortgage if you’re currently paying back debt under an Individual Voluntary Agreement (IVA). You’ll just need to be prepared for your preferred mortgage provider to dig a little deeper into the nature of your credit issues so they can assess your eligibility for a new loan.
You may also need to provide evidence of two years of payments, as well as provide a larger deposit as an additional means of security for your lender.
An active IVA doesn't have to mean the end of the road. In fact, we work with precisely the type of specialist IVA mortgage lenders you're looking for.
What to consider when applying for a buy-to-let mortgage
A buy-to-let (BTL) mortgage is designed for people who are looking to purchase additional property and rent it out in order to make a profit on their initial investment. In the UK, there are no limits on how many properties one person can own – so, as long as you understand your responsibilities and duties as a landlord, it can be an incredibly lucrative way to generate capital.
When looking for a buy-to-let mortgage, price is a very important factor, as it will directly affect the viability of your investment. When working out how much you can afford, you will need to consider how much you will need to set aside for the payments on your residential mortgage (if you have one), as well as any other financial commitments that could affect your ability to keep on top of your BTL mortgage repayments. Remember, too, that buy-to-let deposits are significantly larger than those for a standard residential mortgage. You will usually need a bigger down payment to not only secure a mortgage in the first place but access the most competitive rates.
Buy-to-let mortgages have been notoriously difficult to obtain in the past due to stringent income and affordability checks, not to mention volatile markets. For the best chance of success, it’s important to explore all your available options before making a decision on which lender to use.
How will having an IVA affect your BTL mortgage application?
An Individual Voluntary Agreement (IVA) is a formal and legally binding agreement between you and a creditor (or creditors) that stipulates how you’re going to pay back your debts over a certain period of time.
Whilst an IVA can be a much more flexible way of meeting your financial obligations, it can also be expensive and make it difficult for you to gain any credit elsewhere – including from a mortgage provider. Lenders are likely to look negatively upon a current or recent IVA on your credit file. They may see this as a potential risk to you being able to make your monthly repayments and therefore be unwilling to offer you a deal. An IVA will have quite an impact on your credit report, and, sadly, mortgage applicants with poor credit history will find it harder than expected to be approved by the usual mortgage lenders.
Because an IVA is a legal agreement, you will need to request permission from your Insolvency Practitioner (IP) to apply for any credit agreement over £500, including a buy-to-let mortgage. Your IP will consider your financial situation and will only permit you to apply if they think you will be able to afford the repayments.
If you’re given permission to apply for a mortgage, we recommend that you work with a specialist BTL broker who can help you find a lender that is more likely to accept your financial situation and offer a rate that is affordable for you.
Why use a mortgage broker?
At CLS Money, we excel in supporting budding landlords with a history of bad credit – including those who have been in or are still in an IVA.
As a specialist mortgage broker, CLS has decades of experience in securing specialist mortgages, and we’d love the opportunity to talk you through your options. Getting a mortgage after an IVA doesn't have to be as hard as you expect, despite a less than attractive credit history. We know that there's a mortgage lender for every eventuality, and it's our job to track them down, ensuring you mortgage approval with the monthly payments you can manage.
We work incredibly closely with a range of specialist lenders that include bad credit mortgages as part of their service list. With our vast experience, we've got expert mortgage advice for every type of borrower, including adverse credit issues and providing mortgages where high street lenders wouldn't entertain them.
Book in for a free initial consultation today. You can speak with us online, over the phone or in person, and we have plenty of appointments available during the evenings and at the weekends for those of you who aren’t usually available between normal working hours.