Mortgage after IVA

Introduction to Mortgage after IVA

For many people when they are in debt they would not consider taking on the additional expense of a mortgage. It would not be impossible to take on a mortgage while you are paying off your IVA but there would be stringent conditions set by the company.

It is not only people actually with IVAs that may need help when it comes to a mortgage but also those with a low credit rating. These are known as subprime mortgages and sometimes credit repair mortgages. Sadly it is during the time you are in debt that you may find you are need of somewhere else to stay as a lot of relationships do not survive the years spent paying off the bills. There are slightly different regulations so a mortgage after your IVA starts will be on worse terms than a mortgage once it has been completed.


Taking out a Mortgage

When you apply for this type of mortgage you may find that the company will insist on certain restrictions that would not apply to a normal mortgage. It will be possible to put down as little as 5% of the cost of your house and this will still have to be agreed by the creditors. If you have £1000s of pounds to use to a down payment some of them may want you to pay off more of the debt. If this money is provided by a partner who will also be on the mortgage then this will not be an issue. It is only your money that the company can take into account not a third party’s.

One of the conditions will be that the house is valued at times and a percentage of the equity may have to be paid. This could be as high as 75% of the difference between the value of your house and the loans outstanding on it. It is possible that they will ask you to pay this within the lifetime of the IVA and this could include a remortgage. The amount of interest charged with an IVA mortgage will be much higher than if you do not have an IVA. You will be seen as a risk and the company will want to be recompensed for their trust. If the payments are made correctly it is possible to apply for a reduction. The time since the IVA was completed may determine the offer you are made. If it has just been completed the rates will be higher than if it was completed some years earlier.

Maintaining a Mortgage after IVA

If you have a mortgage before you sign the agreement the amount you pay will be taken into account when they work out what you need to pay each month. Most companies just want to get back some of the money they are owed and have no wish to see you bankrupt. If you can carry on with your life in as normal a way as possible you are more likely to keep your job, keep your life on an even keel and make your IVA payments each month.

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