Getting a mortgage after an IVA might be easier than you think. There are a number of lenders who might work with you.
Jump to article contents:
- You can get a Mortgage after an IVA
- How long do you have to wait before applying?
- What deposit will be required?
- How much will the mortgage cost?
Finished your IVA and want to get a mortgage? Give us a call (0800 180 8013) or complete the form below to speak to one of our experts
You can get a Mortgage after an IVA
You can get a mortgage after you completed an IVA. However your options will depend on whether the record is still showing on your credit file.
If it has already come off there are now some high street lenders who will consider lending to you. However by no means all of them. A good way to access to the lenders who can help is to use a specialist mortgage broker.
Where the record of the Arrangement is still on your credit file it will not be easy to get a mortgage. You will have to speak to a specialist broker about using a sub prime lender. However even then they will only be able to help in specific circumstances.
Even after the record of your IVA has already come off your credit file it is recommended that you use a specialist broker to help you get a mortgage.
Want to get in touch with a specialist mortgage broker? Contact us for more help.
How long do you have to wait before applying for a Mortgage?
The record of your IVA will remain on your credit file for 6 years from the date it started. It then comes off automatically and your credit rating will dramatically improve.
It is very unlikely that you will find a high street mortgage lender who will consider you while the record remains on your file. As such in almost all circumstances you will need to wait for the full 6 years before applying.
Some specialist lenders (known as sub prime) may lend before the record has come off your file. However only in very specific circumstances. Right to Buy and Shared Ownership mortgages are normally only available after the record has come off your file.
Settling your IVA early will not make it easier to get a mortgage. The record will remain on your credit file for the full 6 years whether you settle early or not.
What Deposit will be required?
In order to get any mortgage you will need to put down a deposit. After you have been through an IVA it is no different.
If you are looking to buy a property and it is 6 years or more since your Arrangement started then with the right help you should be able to use a high street lender. As such you will need a deposit of 5-10% of the sale price.
If the record is still on your credit file any sub prime lender who is willing to work with you will require a much higher deposit. This will normally be between 15% an 25% of the property price.
The size of mortgage you can borrow will depend on the money you have coming in. Normally the amount will be limited to a multiple of around 4-4.5 times your gross income.
How much will the Mortgage Cost?
When applying for a mortgage it is important to understand that you will have to repay both the money you borrow and interest. The amount of interest charged will significantly influence your monthly repayment.
To give you an idea of this an interest rate of 1% pa on a mortgage of £180,000 will cost £1800 a year or £150/mth
Once the record is off your credit file you can expect to be charged standard market rates from a high street lender. However if you are looking for a mortgage sooner and need to use a sub prime lender the rates will be far higher (you can expect 7%-8%).
The specialist broker you use to arrange your mortgage will charge a fee. This will depend on the amount you borrow. It can be paid on completion of the mortgage or added to the loan itself.
Your home may be repossessed if you do not keep up repayments on your Mortgage or other loan secured upon it.