Mortgage After Expiry of IVA

redb_2

I have a friend who needs some help.

His situation is that 5 years ago he go into some serious debt, he got it sorted and set up an IVA. He has managed this very well and is coming out of it in May of this year. Therefore that will be 5 years of being clean. Howevever I understand that your credit record goes back for 6 years – so I guess the issue will appear when the lenders do their checks. I also know that some lenders ask questions like “have you ever been subject to a bankruptcy? IVA ?DMP ?”.

He is looking at getting at buying somewhere for around £100k before the end of the year. He will be coming into a sum of money this summer of around £20k giving him an LTV of around 80%. His salary is around £25k so it’s a mortgage multiple of around 3.2. All the figures are rough at the moment.

His job is as secure as can be, 10+ years service in local government.

So are there any lenders that will be interested ? Will these be high street names or will it be specialist lender? What sort of interest rate can he expect ? Should he be doing anything to give them confidence he is now not a risk (eg getting a credit card and paying off the balance every month)? Is he better off waiting for a year to ensure he is through the 6 year rule ? If we change the figures so its an LTV of less than 75% or a salary multiple of less than 3 does this give us more options.

Finally, one other possibility is that his parents might act as guarantor on the mortgage, they are mortgage free and have substantial monthly income. They could even do a BTL on his property and rent it out to him but I think he really wants a place of his own.

Any comments/ suggestions are appreciated
Thanks

Conrad

As ever it all depends on what entries appear on thier credit files with Equifax and Experian.
In particular any late payments in the last 6 years.

Maybe do an online application with Abbey - they seem to allow some such cases through. As for mentioning adverse, yes you are supposed to but it will almost certainly lead to a decline by any prime lender if you do. The FSA says people should disclose the facts, but on the next breath they urge people to get the most affordable deal!!

If the records show adverse credit, then it may be only sub prime lenders will consider. The cheapest of these as far as I know is Beacon, which from memory do up to 80%.

Guarantors - tends to make it even more complex and wont be any benefit anyway as rates are ALWAYS driven by the main applicant not the guarantors status.

B2L in parents name as you suggest might be worth considering.

We could talk forever, but in the end he will never know until he applies.

redb_2

"mentioning adverse, yes you are supposed to but it will almost certainly lead to a decline by any prime lender if you do"

does this mean that he will never be able to get a prime mortgage ?

I am not looking for him to lie on his application, but i dont suppose you happen to know if there are any mainstream lenders who dont ask the question "have you ever been a bankrupt/ IVA? etc"