It's Free to Speak to an Advisor, 7 days, 8am - 10pm
It's Free to Speak to an Advisor, 7 days, 8am - 10pm
An Individual Voluntary Agreement (IVA) is a formal contract established between a debtor and the lending body, known as the creditor. The purpose of such an agreement is to formulate a manageable monthly repayment scheme that usually spans over five years.
This arrangement is guided by an Insolvency Practitioner, an expert in levering debts. They will act on your behalf, communicating with the creditors to warrant prompt payments.
Whilst possessing an IVA can present some challenges when seeking a mortgage, it isn’t entirely unattainable. Given the nature of the situation, it’s strongly advised to consult an Insolvency Practitioner prior to applying for a mortgage.
The reason behind this advice lies in the terms of your agreement. In certain instances, if you apply for credit that tops £500 during your IVA term requires written approval from the creditors agreeing to your IVA terms. This approach seems logical, given that the bedrock of an IVA is all about managing your finances and making feasible monthly payments.
Any extra credit obligations could harm your repayment of the IVA. After all, from the creditor’s perspective, surplus income should ideally go towards repaying your IVA.
Affordability is key when considering an IVA. The debt repayment plan must be manageable, but also leave sufficient disposable income to cover housing and other necessary living costs.
Subscribe to our monthly newsletter for the latest scoop on the mortgage market. Thank you! You are now on our mailing list, stay tuned for more updates!
An IVA may impact your mortgage application. While an IVA generally represents a more favorable option than missing payments, it’s highly likely to impair your credit score, which in turn may limit your chances of securing a mortgage. Furthermore, the mortgage lender needs assurance that you have enough disposable income left. If you were a mortgage holder prior to your IVA, this was factored into your agreement.
That said, if you’re pondering this option down the line, remember that you’ll already have basic living expenses and IVA repayments to consider, thus affording a mortgage on top may not be feasible. Extra income might be best used towards settling your IVA.
Even though the idea of home ownership once your IVA concludes may be attractive, it’s prudent to exercise caution. While you’re now free to manage your income as you please, your credit file will still need ample time to recuperate. Often, it’s advised to wait a few years to ensure your position is optimal.
Getting a mortgage or remortgage with bad credit is possible, but having a healthier credit file will yield much better interest rates.
Date Last Edited: February 15, 2024
Read our 438 Reviews
Manchestermoneyman.com & Manchestermoneyman are trading styles of UK Moneyman Limited, which is authorised and regulated by the Financial Conduct Authority.
UK Moneyman Limited is Registered in England, No. 6789312 | Registered Address: 10 Consort Court, Manchester, HU9 1PU.
Authorised and Regulated by the Financial Conduct Authority.
We are entered on the Financial Services Register No. 627742 at www.register.fca.org.uk
Contact
Follow Us
Manchestermoneyman.com & Manchestermoneyman are trading styles of UK Moneyman Limited, which is authorised and regulated by the Financial Conduct Authority.
UK Moneyman Limited is Registered in England, No. 6789312 | Registered Address: 10 Consort Court, Manchester, HU9 1PU.
Authorised and Regulated by the Financial Conduct Authority.
We are entered on the Financial Services Register No. 627742 at www.register.fca.org.uk
Speak to an Advisor – It’s Free!
7 Days a Week, 8am – 10pm
