First Time Buyer Mortgage With an IVA
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First Time Buyer Mortgage With An IVA- How to get a mortgage after an IVA as a first time buyer and bad credit
Securing a mortgage as a first time buyer can be challenging under the best of circumstances. If you have previously entered into an Individual Voluntary Arrangement (IVA), the road to homeownership might seem even more daunting. This article will guide you through the steps to getting a mortgage after an IVA and help you understand the nuances involved, from understanding your credit history to working with specialist mortgage brokers.Even after years of diligent saving, coming up with a five per cent deposit for your first home can still seem like a daunting challenge.
However, with the availability of first-time buyer mortgages that require no deposit, you may be able to step into your
What is an IVA Mortgage and How Does It Affect First Time Buyers?
An Individual Voluntary Arrangement (IVA) is a legally binding agreement between you and your creditors to pay back debts over a set period. Typically lasting five to six years, an IVA allows you to make manageable monthly payments based on what you can afford. While an IVA can provide much-needed relief from debt, it will also leave a significant mark on your credit file, which impacts your future financial endeavour’s, including getting a mortgage.
The presence of an IVA on your credit file can complicate your attempts to get a mortgage. Traditional mortgage lenders often see an IVA as a sign of financial instability, making them reluctant to offer you a mortgage product. This reluctance stems from the high risk associated with lending to someone who has a history of managing debt issues. Consequently, many first time buyers with an IVA may face rejection from many lenders, leading them to seek alternatives such as specialist IVA mortgages.
Yes, there are specialist IVA mortgages available tailored for individuals who have undergone an Individual Voluntary Arrangement. Specialist mortgage lenders understand the unique financial situations of those who have had an IVA and may be more willing to offer you a mortgage with slightly different terms. These lenders consider the steps you have taken to resolve your financial issues and offer products that provide a viable path to homeownership despite your credit history.
Improving your chances of getting a mortgage after an IVA involves several key steps. First, focus on rebuilding your credit score by ensuring that all your bills and obligations are paid on time. Avoid taking on new debt and try to reduce existing balances. Regularly check your credit report for errors and correct any inaccuracies. Consider saving for a larger deposit, as a higher deposit reduces the risk for lenders and increases your chances of getting approved for a mortgage.
Honesty is crucial when filling out a mortgage application. You must declare an IVA on your application, even if it has been completed. Failure to disclose this information can result in the outright rejection of your application or the withdrawal of an offer down the line. Specialist mortgage lenders are more understanding about past financial difficulties, but transparency can help you secure the most appropriate mortgage product for your circumstances.
Should You Use a Mortgage Broker to Get a Mortgage After an IVA?
Using a specialist IVA mortgage broker can significantly increase your chances of getting a mortgage after an IVA. These brokers have extensive knowledge of lenders who offer products tailored to individuals with a poor credit history. By leveraging their expertise, a specialist mortgage broker can help you navigate the complex mortgage landscape, identify suitable lenders, and apply for a mortgage under terms that best fit your financial situation.
Finding a good mortgage broker experienced in handling IVA cases involves some research. Look for brokers with a solid track record of securing mortgages for clients who have had an IVA. Recommendations from friends, family, or financial advisors can also be invaluable. Ensure the broker is fully accredited and registered with relevant regulatory bodies to guarantee they adhere to industry standards.
A mortgage advisor plays a pivotal role in helping you secure an IVA mortgage. They assess your financial situation, guide you through the application process, and help compile all necessary documentation. A knowledgeable advisor will also negotiate with lenders on your behalf to secure the best mortgage rate, making the process smoother and increasing your chances of being accepted for a mortgage.
How Does an IVA Affect Your Mortgage Application?
When applying for a mortgage after an IVA, the information you provide is crucial. You will need to submit detailed financial statements, including proof of income, expenditure, and a full credit history. Documentation regarding the IVA and its completion status will also be necessary. Accurate and comprehensive information helps lenders assess your application more favourably.
First time buyers with an IVA face several common challenges, primarily related to their creditworthiness. The IVA on your credit file can make traditional lenders wary, often resulting in higher interest rates or more substantial deposit requirements. Additionally, the application process can be more lengthy and complex, with more stringent documentation and eligibility criteria to meet.
To improve your mortgage application post-IVA, start by maintaining a stable and documented income source. Showing consistent employment and income stability is reassuring to lenders. Additionally, consider applying for a mortgage with a significant deposit, as this reduces loan-to-value ratios and enhances your appeal as a low-risk borrower. Lastly, work on clearing any remaining debts to present a strong, solvent financial position.
What Are the Chances of Getting a Mortgage After an IVA?
Several factors can influence your chances of getting a mortgage after an IVA. These include the length of time since your IVA was completed, your current credit score, and your overall financial health. Lenders will also consider your employment status, income level, and the amount of deposit you can put down. Demonstrating responsible financial behaviour post-IVA is crucial in improving your chances.
Specialist lenders assess your mortgage application through a holistic approach, evaluating both past credit issues and current financial stability. They take into account the reasons for your IVA and the progress you’ve made in managing your finances since. These lenders are often more flexible with their criteria and can provide tailored mortgage products to meet your needs.
There are numerous success stories of individuals who have managed to secure a mortgage after completing an IVA. These cases often involve proactive financial planning, dedicated efforts to rebuild credit, and the strategic use of specialist mortgage brokers. Such stories serve as a testament to the fact that while challenging, it is indeed possible to get a mortgage after an IVA and achieve your dream of homeownership.
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FAQ
Yes, it is possible to get a first-time buyer mortgage with an IVA. Although it can be more challenging, there are mortgage providers who specialize in adverse credit mortgages and will consider applications from individuals with an IVA on their record.
Having an IVA can affect your mortgage application by limiting the number of lenders willing to consider your application. Lenders will typically view an IVA as a sign of financial instability, which may lead to higher interest rates and stricter requirements for approval.
An IVA will stay on your credit report for six years from the date it was registered, even if the IVA has been satisfied early. During this period, it can negatively impact your credit score and your ability to secure a mortgage.
Yes, you can remortgage with an IVA on your record. However, it may be more complicated and could result in higher interest rates. Consulting with a credit mortgage broker can help you find suitable mortgage providers.
Having a joint mortgage with someone who has good credit may improve your chances of getting approved, as the lender will consider both applicants’ credit histories. However, the IVA on your record will still be a factor in the lender’s decision.
To improve your chances of getting a mortgage after an IVA, you should focus on rebuilding your credit. This includes paying off outstanding debts, managing credit responsibly, and avoiding taking out new credit unnecessarily. Rehabilitation of your credit status will make you more attractive to lenders.
Individuals with an active IVA should get in touch with a credit mortgage broker who has experience in dealing with adverse credit situations. These brokers can help you find lenders who specialize in bad credit mortgages and can provide guidance throughout the application process.
Lenders might reject every mortgage application if you’ve had an IVA because it indicates past financial difficulties. Lenders typically prefer applicants with clean credit histories, and an IVA suggests a higher risk of default.
Yes, there are specific mortgage lenders who specialise in first-time buyer mortgages for people with an IVA. These lenders understand the unique challenges faced by those with an IVA and offer products tailored to meet their needs. Working with a credit mortgage broker can help identify these lenders.
Yes, an IVA can affect getting a mortgage even years after it has been satisfied, as the IVA will stay on your credit report for six years. Its presence can continue to influence lenders’ decisions and may affect your ability to secure the best mortgage terms.
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What is an Individual Voluntary Arrangement (IVA)?
An Individual Voluntary Arrangement (IVA) is a legally binding agreement between you and your creditors to pay back debts over a set period. Typically lasting five to six years, an IVA allows you to make manageable monthly payments based on what you can afford. While an IVA can provide much-needed relief from debt, it will also leave a significant mark on your credit file, which impacts your future financial endeavour’s, including getting a mortgage.
No. while comparison sites can be helpful in carrying out the initial self-research in the early stages of a mortgage journey, they are not as sophisticated as the specialist mortgage search tools at our disposal which will be able to accurately calculate your affordability, match your circumstances to the lenders criteria, ensuring you not just get the best rate but the best product for your circumstances.
Unlike arranging your car insurance finding the best mortgage for you requires a detailed understanding and knowledge of each lenders criteria and a thorough expertise of how lenders operate.
But more importantly than all of the above is the personal service that we offer. The mortgage process as everyone knows is a complex one, with a lot of complex forms and paperwork that you want to ensure is right first time, and with our expert knowledge we will ensure this is so. This is something that isn’t possible if you do your mortgage via a comparison site.
The simple answer is yes. Before your advisor would show you any of the products available we’ll start the process with and extensive conversation, taking the time to truly understand your individual circumstances and what it is are your priorities when it comes to a mortgage, what your budget is and any circumstances that may affect your ability to borrow. This enables us to find a mortgage which works best for you and your family.
We do this by calculating what you can realistically afford, taking into account all income and expenditure, looking to understand your individual situation and needs, then offer you bespoke advise based on this and our comprehensive expertise. With this information the challenge of finding the right mortgage becomes a little easier.
When you involve a mortgage advisor early in the home buying process it maximises our ability to help you and ensure that you are able to present your circumstances in the best light possible, allowing you to reduce the risk of the disappointment and frustration of being rejected by a lender. Basically the sooner you contact an advisor the better!!
Our mortgage advisors will help you understand how much you can borrow and this information will ultimately dictate the price range you will be searching for properties within.
If you happen to have your heart set on a specific house before you have spoken to an advisor then there is every chance that you have overestimated how much you can afford to borrow, making the home that you have set your heart on unattainable. As you can imagine this is deeply frustrating and can be truly demoralising and embarrassing.
We don’t just advise on your purchase price range, but we will also give you a comprehensive breakdown of all the other costs involved in the not just the application process but the house purchase process, so you are fully prepared before you start your home buying journey.
Speak to a mortgage specialist today to give you the best chance of getting your dream home.
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