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Going through an Individual Voluntary Arrangement (IVA) can be incredibly stressful, but it doesn’t mean you have to remain in financial exile. If you’ve worked hard clearing your debts and are now dreaming of buying your own home, you might be worried that your bad credit will hold you back from a mortgage after an IVA.
Although high street banks and mainstream lenders may not be willing to help, there are more flexible lenders who understand life doesn’t always go exactly to plan. Here, we’ll walk you through exactly how an IVA affects a mortgage, tips for finding specialist IVA mortgage lenders, and how to get your finances back on track.
Can you get a mortgage with an IVA?
Yes, this is definitely possible. An IVA doesn't have to mean the end of your homeownership dreams, and an IVA mortgage is more common than you might think. Whether your IVA is currently active or has been settled for years, there are potential pathways available to you for getting a mortgage.
However, it’s important to be realistic. You’ll likely need to look beyond the standard mainstream lenders because they tend to have strict criteria around adverse credit issues. Also, if you have an active IVA, you’ll need to get permission from your insolvency practitioner (IP) before you can take out a mortgage.
Because an IVA is a severe form of bad credit, you will need to approach specialist lenders who are more flexible and assess applications on a case-by-case basis. Sometimes these lenders won’t allow direct applicants, and you’ll need an introduction from a mortgage broker.
Lending criteria for this type of bad credit
When you apply for a mortgage with, or after, an IVA, specialist lenders will look at a few specific details to decide if they can offer you a home loan. Every lender is different, but they will generally focus on:
Settled or active IVAs: It’s much easier to get a mortgage if your IVA is settled. Getting a mortgage with an active IVA is harder and usually requires a larger deposit (often 30% or more), plus written permission from your insolvency practitioner (IP).
How much time has passed: The longer it’s been since your IVA was registered, the better. Lenders usually prefer the IVA to be fully settled, and if it was registered more than 6 years ago, you’ll have far more borrowing options. Each lender will have a preference around the timing of an IVA.
Deposit size: Because an IVA adds risk for the lender, they’ll usually ask for a larger deposit to secure your mortgage. Depending on your situation, you may need a deposit of at least 15% to 20% to get a mortgage after an IVA.
Recent credit: Lenders want to see that your financial difficulties are firmly in the past. If you’ve kept a nice and clean credit record since your IVA began (with no missed payments, defaults, or CCJs), your chances of mortgage approval are much higher.
How to get a mortgage after an IVA
Taking a few small, manageable steps before submitting your application can massively boost your chances of securing a competitive mortgage after an IVA:
1. Check your credit files: Look at all your credit reports to see the status of your IVA and whether there are any obvious mistakes or issues (it’s important to ensure none of the individual debts included in your IVA are showing as active defaults). You can view your credit reports by heading to Checkmyfile and using the free trial.
2. Find your completion certificate: If your IVA is settled, mortgage lenders will likely want to see some evidence. Along with all your other documents, make sure you have your official completion certificate from your insolvency practitioner safely filed and ready to show off to prospective lenders.
3. Speak to a specialist broker: An experienced IVA mortgage broker knows exactly which lenders will be sympathetic to your specific situation - saving you time and money while preventing unnecessary hard credit checks. They can introduce you to the best IVA mortgage lender for your specific circumstances.
Connect with an adverse credit mortgage specialist
IVA mortgage Interest rates
The exact IVA mortgage interest rates you’re offered will heavily depend on three factors:
- How long ago your IVA was registered
- The size of your deposit
- What lender you approach
Because IVA mortgage lenders are taking on more risk, you should typically expect interest rates to be higher than standard deals. If your IVA was registered 6 years ago and is no longer visible, certain specialist lenders may offer deals similar to those for standard applicants.
However, if your IVA was settled more recently, the rates will likely be higher. The good news is that you don't have to remain on a high rate forever.
Many of the people we’ve helped in the past will take out a specialist bad credit fixed-rate mortgage for a few years, then our expert brokers help them remortgage onto a much cheaper rate once their credit has fully recovered.
Tips for getting a mortgage after an IVA
To give yourself the best possible chance of mortgage approval after an IVA, here are some practical tips to keep in mind:
1. Focus on small wins: Keep your credit squeaky clean and start rebuilding. Make sure you're registered on the electoral roll at your current address. Keep up with all utility bills and other commitments. And, try to pay down any small credit card balances to show lenders you are managing your money well.
2. Wait if you can: Time heals all wounds, even a bad credit history. If your IVA was registered 5 years ago, waiting just one more year will open up a wider pool of lenders and better rates.
3. Save a larger deposit: Aim for at least 15% to 20%. If you can, save even more because a larger deposit lowers the loan-to-value (LTV) ratio, which reduces the lender's risk and makes them more comfortable about your application.
4. Don't take on new debt: Although you may feel like splashing out with your new financial freedom - avoid taking out new personal loans, car finance, or running up large credit card balances in the build-up to your application. Lenders want to see that you are living well within your means.
5. Sort your paperwork early: Alongside your IVA completion certificate, gather your last three months of bank statements and payslips so you are ready to move quickly when your specialist IVA mortgage broker finds you the right deal.
Remortgaging after an IVA
If you already own a home and have an IVA, you might be looking to remortgage. This could be to consolidate debts, secure a better interest rate once your current deal ends, or even to release equity from your property to pay off your IVA early (known as a full and final settlement).
Just like buying a new home, remortgaging with an IVA also requires a specialist approach. Also, if you want to release equity to clear the IVA, your insolvency practitioner will need to agree to the settlement figure.
An experienced bad credit mortgage broker can help you dot the i’s and cross the t’s to weigh up whether the costs of remortgaging are worth it to become debt-free sooner.
"The biggest mistake borrowers make when dealing with an Individual Voluntary Arrangement (IVA) is applying to high-street banks before it drops off their credit file. Mainstream lenders like HSBC or Halifax use automated credit scoring, and an active or recently discharged IVA will almost always trigger an instant decline - leaving a hard search footprint that damages your profile further.
"Getting a mortgage with an active IVA is exceptionally rare and requires written permission from your Insolvency Practitioner. The real window of opportunity opens once the IVA is officially discharged. During the first 1 to 3 years post-discharge, specialist lenders like Pepper Money, Bluestone, and Kensington will consider your application, provided you have a larger deposit of 15% to 25%. Once you cross the 3-year post-discharge mark, we often see deposit requirements drop to 10% or 15%, with rates shifting from 'heavy adverse' into 'near-prime' territory.
"Once 6 years have passed from the original registration date, the IVA disappears entirely from your credit file. At that point, assuming your recent conduct is clean, the high-street market completely reopens to you. Until then, always use a specialist adverse-credit broker who can place your case manually with underwriters who look at the story behind the debt, not just the computer score."
John Tarazi Ready to chat to an IVA mortgage specialist?
We know how overwhelming it feels to apply for a mortgage when you have a history of bad credit. But you don't have to do it alone, and you certainly don't have to give up on buying a home.
Our friendly, judgment-free team has years of experience helping people in similar situations secure a mortgage after an IVA. Our brokers have relationships with specialist lenders, know their criteria, and understand exactly how to package your IVA mortgage application for the best chance of success.
You can get started here if you’d like a free chat with an Echo Finance mortgage broker who specialises in IVA mortgages to help you overcome any remaining homeownership hurdles.
FAQs
Yes, unfortunately there’s no escaping the fact that an IVA will impact mortgage applications because it stays on your credit file for 6 years from the date it’s registered.
Although it can significantly impact your ability to find a mortgage, getting some specialist guidance from a bad credit broker means that you can face everything head-on and still get the result you’re looking for.
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