An Individual Voluntary Agreement (IVA) is a legally binding arrangement between a debtor and a creditor.
Its purpose is to create a structured plan for repaying debts over an extended period, typically around five years. Throughout this process, an Insolvency Practitioner acts as a mediator, liaising with creditors to ensure consistent and manageable repayment.
While obtaining a mortgage with an existing IVA presents its challenges, it’s not an insurmountable hurdle. To explore your options, it’s advisable to consult a mortgage broker in Harrogate.
Engaging a professional is crucial due to the contractual obligations of an IVA. When entering an IVA, you commit to specific terms and conditions that can impact your capacity to secure new credit, including a mortgage. These terms usually extend until all outstanding debts are cleared through the IVA.
This stance is logical as IVAs aim to facilitate better financial management and sustained repayments. Assuming additional credit obligations might compromise your ability to meet the IVA commitments.
The central consideration in an IVA is affordability. Creditors need assurance that your repayments remain viable, while you also retain sufficient disposable income for essential living expenses, including housing.
Having reached a point where an IVA is necessary, your credit history might be significantly impacted. Consequently, obtaining a mortgage with an active IVA in Harrogate could pose challenges. Mortgage lenders tend to hesitate when dealing with individuals perceived as high-risk.
Furthermore, the lender must ensure that you have an adequate amount of disposable income left over. Given an IVA, a considerable portion of your earnings might be allocated to debt repayment. Combining this with mortgage payments might result in inadequate remaining funds each month.
If a reasonable amount of disposable income remains, securing a mortgage could be a possibility. As a reputable mortgage broker in Harrogate, our suggestion is to concentrate on repaying a substantial portion of your debt first before pursuing a mortgage application.
If you’re considering moving home in Harrogate, it might be worth delaying an application for a new mortgage until you’ve settled your existing debt.
Although the temptation to initiate the mortgage process immediately after settling your IVA might be strong, it’s wiser to assess your current financial stability and ensure your budget accommodates a mortgage.
As experienced mortgage brokers in Harrogate, we advocate rebuilding your credit score, amassing a deposit, and planning for your transition into a new home. Affordability is paramount in home buying; you must ensure you have the necessary funds before committing to a mortgage.
Our specialised mortgage advisors in Harrogate are ready to evaluate your mortgage affordability, even in the context of an IVA. We’ll examine your mortgage alternatives and identify the best path based on your unique financial situation.
To connect with a mortgage advisor in Harrogate, you can conveniently book a free mortgage appointment or remortgage review (if you’re looking for remortgage advice in Harrogate) online or contact our team directly.
Last Edited 17/08/2023