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IVA Remortgage – Complete Guide, FAQs & More

IVA Remortgage

Have you recently applied for an Individual Voluntary Arrangement and need to remortgage?

If so, you may be wondering what your chances are of getting a remortgage despite being bound by the financial constraints of an IVA.

How do you build up equity in your home? Don’t worry! I’ve compiled a guide to help you learn everything you need about owning a home even with an insolvency solution listed on your credit report.

Let’s get right into it.

What is Remortgaging?

Remortgaging, to put it simply, is when you attempt to get another mortgage to replace the one you currently have.

The new mortgage can be exactly the same amount of money as your previous mortgage or more. Usually, remortgaging is done when you want better terms and a more favourable interest rate on your home loan.

When you get a remortgage, you usually get one when you’re struggling, or know you will struggle, because of the terms associated with your current mortgage.

IVA mortgages or a mortgage with IVA are descriptions of a person wanting to take out a mortgage during an individual voluntary arrangement that is authorised and regulated by the court.

Getting a remortgage is more common than most people think. Lots of people feel the need to remortgage when the terms of their current home loan start to overwhelm them.

How Do IVAs Affect Your Remortgage submission?

IVAs do have some impact on your attempt to get a mortgage loan.

If the IVA is still listed on your credit report, there’s a chance that some mortgage lenders will see you as an untrustworthy and unreliable borrower.

When looking into whether they should lend you, mortgage lenders consider a lot of factors at play. However, in most instances, the two most important factors to them are your credit report and your borrowing history.

While it is certainly true that IVAs impact your image as a reliable borrower, it’s not something that will always warrant an instant rejection from lenders you approach to get a mortgage loan from.

They’ll also consider the amount you’ve borrowed in the past and the outstanding amount you have to pay on your loan. As you keep making payments on your mortgage, your home equity increases.

The amount of equity you have, or “home equity” is the value of the house you own minus the debt you owe on it.

An IVA can make you look weak and sketchy as a borrower, but if you’re doing it right, it can also make you look financially responsible and motivated.

The bottom line is that IVAs do affect your remortgage submission, but not to the extent that you won’t be able to borrow a mortgage loan at all.

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Is it Possible to Remortgage After Having an IVA on Your Credit Report?

The short and sweet answer is that yes, it is possible to remortgage after having an IVA on your credit file.

However, there are some hurdles that you can expect if you’re attempting to get an IVA with a mortgage.

Mortgage loans are usually very flexible, so it’s probable that you’ll get one if you play your cards right.

If you’re still bound by an IVA, you won’t be able to get a loan without the consent of your insolvency practitioner.

Creditors will be looking at your credit report and your income to determine if you’re a reliable investment.

If a creditor believes that you have the assets and the financial security to pay them back, you can convince them to lend you even with an IVA.

It’s very important to pay back all your payments on time, so that your credit rating improves.

Creditors will be looking at your consistency, particularly when it comes to your IVA. If you’re making all your payments on time and can demonstrate that you have assets or a secure, unwavering regular income, creditors may be willing to loan you.

While it is possible to get a mortgage loan with an IVA, your creditors may want to express their doubts about your ability to pay them back in the form of tighter terms and conditions and maybe even high interest rates.

You may want to try to get a lump sum. If you have bad credit, and not a lot of equity, you may want to consult a mortgage broker.

Important Factors to Consider while Remortgaging with an IVA 

There are two factors that are very important to consider when you’re remortgaging with an IVA.

  1. Your Credit History

If you’ve just recently gotten an IVA, you’ll be worried about your credit report, as you should be.

You’ll find that when it comes to your credit report, time is your best friend.

If you’ve only recently gotten an IVA, the impact from the financial constraints of the IVA will show on your credit report.

However, if it’s been three or four years since you got your IVA, you’ll find that you’ll get several offers for loans, at regular market rates. To put it simply, you’ll be treated as just another lender.

You can improve your credit history by being regular and consistent with your payments. If you have a poor credit history, you may want to look up loans tailored towards people with bad credit, which are regulated by the financial conduct authority (FCA).

  1. Your Income

Your income is also incredibly important to getting a loan with a bad credit rating and IVAs.

The reason why, is because your income determines if you’ll be able to make monthly repayments towards your insolvency solution, and save enough to make repayments towards your new mortgage loan as well.

If you have multiple sources of income and if your income is stable, you’ll find that your chances of getting a loan improve drastically.

Try to create multiple streams of income that you can rely on when you need to make payments to multiple sources.

Don’t keep all your eggs in one basket. Spend money carefully. Improve your house equity. Consider cheaper alternatives to your current utilities. Save as much money as you can.

What Happens if You are not Able to Get a Remortgage?

If you’ve been refused a mortgage loan, you need to assess exactly why you were refused the loans and then work on improving those facets of your financial image.

Usually when mortgages are refused, it happens because of late or missed payments on your insolvency solution, a default, a poor borrowing history, too many hard searches on your credit report, or if potential borrowers have calculated that you won’t be able to pay them back.

If your mortgage has indeed been refused, you need to work on improving your financial situation and keep making your insolvency payments on time each month.

Also, it’s possible for debtors to be unable to get remortgages when their IVAs are relatively new, such as six months or a year old.

If that’s the case with you, it’s better to wait a couple of years, keep making regular payments, borrow responsibly, and work on improving your credit score before applying for a mortgage.

You may also want to talk to an experienced debt help professional, so as to get advice on your specific situation and the circumstances you’re facing.

FAQs

Is it difficult to borrow a mortgage loan with an IVA record?

Yes, while it is difficult to get remortgages with an IVA record, it’s not impossible.

Your credit history is very important when you’re looking to borrow a mortgage loan with an IVA record. 

Creditors may see you as unreliable and irresponsible when it comes to borrowing and repaying.

However, if you act responsibly towards your IVA, you’ll see that many creditors will be willing to loan you at reasonable interest rates.

Once you borrow a mortgage loan, you may be chased around by the creditor and debt collectors.

If debt collectors are threatening to have you jailed if you don’t pay them, these are most likely empty threats and you shouldn’t be worried.

How Does Remortgaging Works on a Jointly Owned Property?

Joint-property remortgages are one of the fastest growing areas of the mortgage business.

The way this works is that each co-owner of the jointly owned property can individually encumber their own share in the joint property by borrowing a mortgage on their share.

Final Thoughts 

Remortgaging can almost be a necessity for people with unfavorable financial circumstances, especially when they find that they can’t maintain their monthly payments with their current interest rate or loan terms.

Mortgage can last well into one’s retirement age, depending on the amount of payments they’ve made, which makes up their house equity.

If you need any more debt advice, feel free to reach out!

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