Can I get a joint mortgage with an IVA?
Can I get a joint mortgage with an IVA?
Luke Grosse explains how a joint mortgage works if you have an IVA.
Can I get a joint mortgage with or after an IVA?
You absolutely can. It is quite tricky because an IVA can do a lot of damage to someone’s credit profile. If you do have an active IVA, the only way lenders will consider it is if it will be repaid as part of a remortgage process.
If you were remortgaging, you’d have to pay it off prior to completion of the mortgage. If it’s a purchase, you’d have to clear it beforehand as well.
There are two steps to an IVA – the date when it was actually registered, when you went into it. You also have the date of satisfaction. If it was a year afterwards and you’re applying for a mortgage another year after that, you’re effectively one year discharged and two years since it was registered.
There are lenders that will consider that. The main caution is that the deposit you need for something like that will be quite large.
What is an IVA?
An IVA is an Individual Voluntary Arrangement, and that’s just one step away from bankruptcy. An IVA wipes out a lot of the debts. It’s essentially a payment plan with creditors to repay debt. The term is usually about five years.
As I said, it can do a lot of damage to your credit profile. Going into an IVA is a big decision to make. All the creditors you have agreements with will default the account right away, so it can wreak a bit of havoc.
The good thing for people is if it removes a lot of debt and almost gives them a clean slate. If they can get that paid off over a number of years and come out of it, it can help the situation.
What risks do I present with an IVA?
All lenders will do credit checks to see exactly what your credit history looks like. An IVA will have done a lot of damage to the credit profile and will restrict your lender options.
Because of that, with the lenders that will look at people very shortly after an IVA, we probably need everything else looking quite comfortable for them – such as quite a big deposit and secure employment. If you’re looking to pay off an IVA but you’re starting a brand new job, lenders may need you to wait a while before they’ll take a look at it.
Will an IVA require a specialist mortgage lender?
Most likely, yes. It can depend on all sorts of scenarios. If you’ve just paid it off, most likely we need a specialist lender because that will be picked up on the credit profile. While there are lenders that do that, it is quite restricted.
However, the more time that passes after you get the IVA paid off, more lenders will open up. Eventually you can work your way towards the high street banks. Once it’s been discharged for a number of years, that can open up many more lenders. It will stay on the credit profile for a total of six years, so it can open up more lenders as time goes on.
Can I get a mortgage without declaring an old IVA?
It’s always best to declare it, because lenders might not pick it up on a credit search. A credit check covers six years, so if it was registered 15 years ago it’s no longer on your credit profile.
However, lenders often pick it up when solicitors do bankruptcy searches. You could have applied, had a mortgage offer come through, and then when the lender finds out about the IVA, they might just not proceed.
So it’s always best to declare it. It can thin out the pool of lenders, but certain lenders won;t accept someone that’s ever had an IVA. It’s best to be upfront.
SPEAK TO AN EXPERT
Can you pass a credit check with an IVA?
Again, if the IVA is quite recent and there are still associated things like defaults on there, you’re looking at more specialist lenders. But the good news is they don’t actually just look at credit scores. They’ll manually assess everything, and look at exactly when the IVA was registered, when it was satisfied and all the defaults associated with that.
Once the IVA is more historic it might open up more high street lenders. They will all do a credit check and it just depends whether you pass their scoring.
Will my partner be affected by my IVA?
If you have somebody living with you, they can link as a financial associate on your credit file. Some lenders will credit score by association. They look not only at the person that’s applying, but also their partner. If your partner has a pristine credit profile, but you have adverse credit like an IVA, it can bring them down.
But other lenders just look at whoever’s applying. They won’t consider a secondary person.
Can I sell my house after an IVA?
An IVA dictates how much you can borrow, and it puts restrictions on any sort of borrowing over £500. But if you were selling your house, that’s completely up to you.
In terms of repaying the debt, that’s something to consider because it’s doing a lot of damage to your credit profile. Assuming you’re going to be purchasing another property with a mortgage, getting the IVA repaid will open up lender options to you.
Where can I get more information on IVAs and mortgages?
A mortgage broker can advise about getting a mortgage with an IVA. You can also get all sorts of information from gov.uk and various debt relief charities like StepChange or Citizens Advice, for example.
But they often won’t provide mortgage advice alongside that. If you speak into a broker when considering going into an IVA, we can explain how that’s going to limit your mortgage options going forward and what steps you can take.
What to know about joint mortgages with an IVA?
Most people who have had an IVA will need to use a specialist lender, and a lot of them are only available direct through brokers.
As I touched on before, with some lenders if you’ve ever had one, your application could get thrown out later down the line. You could apply direct with some lenders, but they may have criteria around a past IVA and will never do it. If you’ve got a good quality mortgage broker, they would put you with a lender that’s aware that you had the IVA and will be happy with it, provided it’s been discharged a number of years. That will prevent you having any issues down the line.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
