Moving home, IVA

How to get a mortgage when you have an IVA

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Home Mover with IVA

If you want to move on to a new property, you may be concerned that having an IVA in place will restrict your mortgage choices and reduce your chances of being accepted by lenders with the best rates.

This is true to some extent. There’s no denying that IVAs and other indicators of poor debt management can be a turn-off for some providers. But it’s not impossible to get a mortgage with a poor credit rating. You just need to know where to look for the best deals, and how to present a strong case to companies that are willing to take a view on your financial circumstances.

Things to consider when moving between properties

A home mover is someone who already has a mortgaged or owned home and is moving into a new property. As a home mover, you can choose to ‘port’ your mortgage with your existing lender or apply for a mortgage with a different provider. Your mortgage broker will be able to advise you on the best option, based on your repayment history and the terms of your current agreement.

As a home mover, you are likely to have some general knowledge when it comes to finding the right mortgage and dealing with brokers. Whilst costs are important to you, you’re focusing on other factors for your move, such as achieving new lifestyle goals; upsizing to meet the demands of your growing family; or changing location due to work or family commitments.

You’re in a much stronger position than a first time buyer, because you have evidence of your ability to pay your mortgage repayments in full and on time, every month. This will put you in a favourable position when it comes to getting a good interest rate. You’re also likely to have built up some equity in your existing property, meaning you’ll be entering into a new agreement with a better loan-to-value (LTV) than before.

One of the most common problems that home movers experience is being stuck in a chain. This is the term used for a sequence of linked home purchases who are reliant on each other for the preceding and succeeding purchases; for example, those buying your house are reliant on you completing on your new home in order to move into your old one.

It’s important to stay in contact with your solicitor throughout the moving process to ensure everyone is kept up to date with potential move dates and any delays are communicated up and down the chain.

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 on a new property, 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 which is affordable for you.

Why use a mortgage broker?

Once you’ve been given the go-ahead to start searching for a mortgage, we would recommend contacting our mortgage brokers straightaway for advice on the best way forward.

Our advisers have decades of combined experience in finding and securing mortgage deals for customers with a history of bad credit – including those who are still paying back monies owed as part of their IVA. We’re honest, we’re straight-talking, and we’ll always take the time to search the whole of the market to find you a mortgage product with the most competitive rates and terms possible. What’s more, we’re even available during the evenings and at weekends, so you can book in for an appointment at a time that suits you!

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Gemma May

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