Does having an IVA affect getting a mortgage?

First time buyer mortgages for borrowers with an IVA

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First Time Buyer with IVA

If you’re currently in an Individual Voluntary Agreement (IVA) – or you have arranged something similar with creditors in the past – you may be nervous about approaching mortgage lenders for fear that they will reject your application due to your poor credit history and tarnished credit report.

You might also be particularly worried about your chances of getting a mortgage if you’re a first-time buyer, as not having a history of making regular repayments immediately puts you into most providers’ ‘high risk’ categories.

But don’t worry. We’re here to help you consider all your options and find an affordable and sustainable way to get onto the property ladder, regardless of the challenges you’re facing.

Things to consider as a first-time buyer

Mortgage lenders define a first-time buyer as someone purchasing a property who has never owned a home previously.

If you’re a first-time buyer, you might not fully understand the mortgage process, so it can be really helpful to speak to an expert to talk you through it. He or she will explain all the key terminology and help you work out how much your monthly repayments will be, as well as how much the mortgage will cost you over the course of your full term.

One key thing to ensure from the start is that you have all the right documents to hand. Any errors, inconsistencies or omissions from your paperwork could be a red flag to your lender and could put you in a poor position when it comes to being accepted for a mortgage.

As a first time buyer, you might not have a strong credit history. Chances are you’ve never had to pay back this kind of debt before. From the mortgage lender’s perspective, taking you on as a mortgage customer is a bit of a gamble because they have no examples of your reliability as a debtor. This is why it’s so important to use a mortgage broker when looking to apply for a first-time buyer mortgage. Their expertise will help you meet lender criteria, which in turn will give you a better chance of being accepted for a mortgage and securing your dream home.

How will an IVA affect your chances of getting a mortgage?

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.

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 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 mortgage 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?

Having an IVA on your credit file isn’t ideal, but it’s certainly not the end of the world when it comes to applying for a mortgage. You just need to work closely with an expert mortgage advisor who understands your situation and has experience in securing loans for customers in similar circumstances.

CLS works with many specialist mortgage lenders, helping all kinds of applicants achieve a mortgage after an IVA. We also work with specialist lenders that have helped buyers achieve a mortgage with an IVA. In fact, if you're looking for an IVA mortgage, CLS is one of the best brokers on the market.

Aside from our expert knowledge of IVA mortgages and our willingness to guide first-time buyers through the application process, there are many other benefits to working with CLS Money. We’re famed for our customer service – in fact, we’ve achieved over 2,000 5 star reviews from happy homeowners who have found us to be especially helpful and accommodating. We also make sure we’re available for evening and weekend appointments, so you can chat with us at times that suit you.

  • Finding a specialist mortgage lender for every situation
  • Expert assistance with every mortgage application
  • Mortgages for applicants with a low credit rating
  • Alternative debt advice and mortgage deals to the high street lenders
  • Mortgage advice for any financial circumstances
  • Helping mortgage applicants who owe money
  • Assistance with monthly payments

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Gemma May

Mortgage Advisor

Gemma May

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