IVA Mortgages

An Individual Voluntary Agreement (IVA) provides a viable substitute to bankruptcy in Britain for those that have been unable to pay off their debts. An IVA proposal is sent to an individual's creditors offering a resolution over a period of five years. A lot of the time you can get as much as 75% of your debt written off.

After the five-year period you will be completely debt free, if you have managed to make all your repayments. It is a serious solution for people that have serious financial problems.

Because an IVA puts a strain on your credit it will also affect your borrowing potential but that doesn't mean it will prevent you from getting a mortgage for a home.

With a bankruptcy you typically are unable to get a mortgage but with an IVA you still may be able to.

What is an IVA mortgage?

The expression IVA mortgage is normally used to refer to; the method of taking out a re-mortgage in order to meet the final payment as arranged in the IVA agreement. In other words, this is an IVA Re-mortgage.

IVA mortgage can also mean applying for a mortgage while within an IVA or having had one recently. This may also be referred to as Mortgage with IVA.

1) IVA Re-mortgage

When the IVA is first set up, some creditors may have a clause that will stipulate that after a few years some of the equity of your home will be released as your final payment to your creditors.

In this case you will be partially restricted on when to re-mortgage, however, this does not mean that you can't get a good deal on an IVA mortgage. The best thing you can do is shop around to find the best deal on the market.

2) Mortgage with IVA

When applying for a mortgage to buy a home during your IVA, or shortly after, you will most likely be subject to higher interest rates due to the fact that lenders will assume you're high risk.

The best way to keep your interest rate low is to allow as much time as possible between the end of your IVA and when you start a mortgage application. This will allow your credit rating to recover during that time. If you're thinking of getting an IVA it's also better to do this sooner than later because it gives you more time to improver your credit after the IVA is over. The longer you wait the higher the interest rate will be so it's best to be aware of your options.

If you don't want to wait for your credit to improve and your interest rate to lower then you can contact a sub-prime mortgage broker that will be able to help you find a lender that specializes in mortgages with IVAs. Brokerage fees can be expensive therefore it might be best if you just contact the lender directly.

Mark Acheson is an insolvency specialist that focuses on Individual Voluntary Agreements (IVA). For more information about the IVA process please contact IVA.net: your Mortgage with IVA resource.

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