Mortgage (for new buyer) after an IVA

Doglover

Hi, I wondered if anyone had much experience of life after an IVA? My husband has an IVA which is due to finish in 18 months time. He started the IVA before we married and I have good credit (inc a mortgage).

We have been saving as much as poss for to increase our deposit for when we're able to buy a house together.

I wondered if anyone knew how soon after completion of an IVA it would take for a mortgage company to show any realistic interest in lending to us. I was hoping that my credit history would help balance things with our application and I appreciate that in today's climate no one would touch us now but I'm all for a longer term plan.

In short, I am asking how soon you would expect it to take for us to be accepted for a mortgage together? We will have 25% deposit saved by the time the IVA actually finishes.

Any advice would be really appreciated, especially from those who have gone through it and come out the other end with a (realistically affordable) mortgage.

Thank you :rolleyes:

danielanthony

I finished my IVA after 5 years in May '08 & tried for a mortgage in Feb '09 but was turned down even though my partner has an AAA credit rating and we had 20% deposit. The thing is, defaults stay on your credit file for 6 years from STARTING your IVA, and if you have defaults on your credit file you wont get a mortgage. My defaults will come off in May '09 which is 6 years after I started my IVA and our mortgage advisor is confident that we will then be accepted.

I have also had to work really hard to get all the entries on my credit file corrected so that they would come off next month, if I hadnt checked Experian and Equifax for the correct 'Default Date' information from creditors then my credit file would have been shot for another 2 years.

Conrad

A couple of sub prime lenders can consider such situations. A good broker should be able to assist as long as they are truly independant and able to use all lenders. Many brokers will imply thier independance but check carefuly - especially those who's business cards show they are members of a netwrok.

Doglover

danielanthony wrote: »

I finished my IVA after 5 years in May '08 & tried for a mortgage in Feb '09 but was turned down even though my partner has an AAA credit rating and we had 20% deposit. The thing is, defaults stay on your credit file for 6 years from STARTING your IVA, and if you have defaults on your credit file you wont get a mortgage. My defaults will come off in May '09 which is 6 years after I started my IVA and our mortgage advisor is confident that we will then be accepted.

I have also had to work really hard to get all the entries on my credit file corrected so that they would come off next month, if I hadnt checked Experian and Equifax for the correct 'Default Date' information from creditors then my credit file would have been shot for another 2 years.

Hi, thanks for your informative reply. That is the info i was hoping to get from here and whilst it is not the best news, it certainly helps with knowing the situation and making our plans. Moral of the story is to get your credit file cleared asap and don't apply until you know it's clear after the 6 year period from the start of the iva - is that right?

Do you have any hints and tips for building good credit post iva?

Good luck with your mortgage app next month and happy house hunting!

Doglover

Conrad wrote: »

A couple of sub prime lenders can consider such situations. A good broker should be able to assist as long as they are truly independant and able to use all lenders. Many brokers will imply thier independance but check carefuly - especially those who's business cards show they are members of a netwrok.

Would you suggest just waiting until everything is clear and off the credit file and just keep saving until then?

danielanthony

I would check your credit file now to make sure that the default date is correctly set on all your defaulted accounts. Its taken me about 6 months to get both my Equifax and Experian files sorted with the correct information. I haven't really lost anything to clear up my file by acting after my IVA finished as there was still a year before the defaults should be removed, but as I left it close to the 6 year limit I feel pressured to make sure everything is corrected in time for our next stab at the mortgage market on 28th May!

You may find that some creditors put a 'default date' before the IVA started, as you obviously got into trouble before the IVA was set up, so your default date was earlier. I had about 12 creditors, now only 2 are still showing up on my file due to earlier default dates recorded by the others. But the legal maximum default date is the start date of the IVA, not a second after!

Getting your credit back up post-IVA: I have a mobile phone contract, credit card (small balance) and a car loan since getting out of my IVA to build up a positive credit history. So far, my Experian score is now 805 which is 'Fair', alot better than the 190 'Very Poor' it was a year ago. Obviously, if I didnt have the three remaining defaults on my credit file (Experian and Equifax) the mortgage advisor says we would have a mortgage by now.

Doglover

danielanthony wrote: »

I would check your credit file now to make sure that the default date is correctly set on all your defaulted accounts. Its taken me about 6 months to get both my Equifax and Experian files sorted with the correct information. I haven't really lost anything to clear up my file by acting after my IVA finished as there was still a year before the defaults should be removed, but as I left it close to the 6 year limit I feel pressured to make sure everything is corrected in time for our next stab at the mortgage market on 28th May!

You may find that some creditors put a 'default date' before the IVA started, as you obviously got into trouble before the IVA was set up, so your default date was earlier. I had about 12 creditors, now only 2 are still showing up on my file due to earlier default dates recorded by the others. But the legal maximum default date is the start date of the IVA, not a second after!

Getting your credit back up post-IVA: I have a mobile phone contract, credit card (small balance) and a car loan since getting out of my IVA to build up a positive credit history. So far, my Experian score is now 805 which is 'Fair', alot better than the 190 'Very Poor' it was a year ago. Obviously, if I didnt have the three remaining defaults on my credit file (Experian and Equifax) the mortgage advisor says we would have a mortgage by now.

Cheers - you have some great advice. However, I'm probably being a bit slow, would you clarify a few points please;

1) Any default dates that show now for any defaults that were over 6 years ago could be removed straight away (with a lot of work by the sounds of things) - is that right?

2) How would we be able to ensure that all defaults, inc the IVA are removed after the IVA finishes but before the 6 year anniversary of entering into it? Is that something we can do once we receive the certificate confirming succesful completion of the IVA? Or are there steps we can take now?

3) When you say to check the default date is correctly set - is that the date that the IVA actually started?

Did you find much difficulty in getting credit once the IVA was completed? Was it your bank who issued the credit card and loan?

Sorry if you think I'm being too nosey - I'm just pleased to find a real person to advise on their situation post IVA and the realities in clearing everything up and moving on.

Your success helps to keep us going through the last slog! :T

danielanthony

Making that final IVA payment was one of the best moments of my life! 5 years is a long time to have some stranger snooping into your financial affairs every year. Lucky I have no kids or other committments so kept my head down and got through it. In answer to your questions:

1) Yes, the credit reference agencies database will remove any entries automatically which have a default date greater than 6 years. For example, one of my defaults had a default date of 28/03/03, and when I checked my file again on 29/03/09 it was removed and no longer viewable on my credit file.

2) You can see your credit file by signing up at Equifax and Experian's websites, there is a monthly cost but once you get the information sorted you can cancel your subscription. They also provide addresses for your creditors, so if the information they have on you is incorrect, you can write to creditors with copies of your IVA agreement (as you dont yet have a completion certificate) asking them to amend the default date data accordingly. I would also send a copy to Experian and Equifax and ask them to also amend these records too. I found using this 'two-pronged' approach worked best, especially as you are paying for this service and they can add a 'Notice of Correction' on your file in the meantime.

3) Yes, the default date should be the actual date the IVA started OR BEFORE (if you are lucky).

No worries regarding the questions. I had to trawl these forums for all the answers I had and now feel like I know more than some of the mortgage providers I have spoken to about credit files!

danielanthony

I need to add that even if you pay off your IVA early, the defaults still count for 6 years. Bit of a bummer I'm afraid. What date did your husbands IVA actually start?

Oh, and I have a Barclaycard with a £400 limit and a loan with VW Finance, its weird having credit again but this time I dont take it for granted!

Doglover

I'm not surpised you felt like that after completing the iva - it's one big challenge but certainly seems a great one to crack!

How long did it take to receive the completion certificate? I have read some horror stories on here. Presumably even if there is a delay with receiving the completion certificate we could use a copy of the iva agreement to show the credit reference companies that it finished on such and such date?

Yes, we looked into using our savings to pay the iva off early but given the length of time left it doesn't seem worth it, especially as it doesn't help clear things any earlier. Fingers crossed any reviews don't end up with horrific increases - they shouldn't unless anything changes.

danielanthony

My completion certificate took 5 months to come through, I thought this was a long time but seeing other peoples experiences I now think I was lucky!

In all honesty, in my situation the certificate of completion was just a mental plus, it didnt help me clean up my file as all my defaults would have gone 7 months later anyway.

However, if your IVA is only 3 years, say, then it would be worth having your certificate as then your defaulted accounts should be marked as 'Satisfied' and you will need the certificate to prove this 'satisfied' status to your creditors (they should already know but updating you credit file with positive information is NOT one of their priorities!). This will help with getting things like overdrafts and car loans if you need them, hence how I got my car so soon after coming out of my IVA.

Hope this makes sense.

Dan