Getting a Mortgage After IVA

Beckwam

Hello, I wonder if anyone can help with some advice.

My Husband's parents want to give us 20K towards the deposit on a house. Amazing! We are going to use 4K of this to settle my IVA for good, and then move back in with my parents for a year or so in order to save another 20k or more if we possibly can, so we have at least a 20% deposit.

I'm really hoping we will be able to get a mortgage.

My husband has probably got a fairly good credit rating, in that he has never had any problems but also not taken out much credit, so I suppose not as good as it could be.

I know that the IVA disappears from my credit file a year after I settle it, and we wouldn't be looking to apply for a mortgage for at least 6 months after that.

I am just confused as to whether you can start building up your credit rating straight after your IVA is closed, and then the following year when it is deleted from your credit history it's even better, OR will I have to wait the whole year and then when it is removed I can start trying to build my credit rating by getting a regular current account and a credit card etc...

I would love for us to be able to buy a house, we have a 6 month old baby now and security is so much more important to me. I'd like to be able to retire with a house and mortgage paid off, rather than having to pay rent for the rest of my life.

Thank you for any advice :-)

FiatFan_2

I understood it that an iva would drop off the credit file/iva register 6yrs after approval regardless of how soon it's paid off, ie F&F settlement. So even if you're 4K F&F is accepted you'll still be hampered until this point. Dependant on your IP, if they know about the 20k rather than 4k they may try and claim it as a windfall regardless of the good intentions it's being offered.

Someone more knowledgeable feel free to correct me if i'm wrong.

izools

I agree with FiatFan here, the record of the fact you entered into the IVA will remain on your credit file from six years the IVA started irrespective of when it's settled.

The best bet is to have the in laws keep a hold of the money and continue paying the IVA as to pay it off soon wouldn't enable you to get a mortgage any sooner.

Once the IVA is settled you will need to do some things:

1. Obtain a copy of all three credit files (Experian, Equifax, Call Credit)

2. Write to everyone who appears on it to request that they

a) mark the default date of the accounts no later than the day the IVA was agreed

b) mark the accounts as settled with a settlement date no later than the IVA was settled

c) ensure the IVA order itself shows as satisfied / discharged. You may need to send proof of completion from your IP to each credit reference agency

3. Keep an eye on your credit files and wait until all the accounts and IVA order appear correctly as above e.g. closed and settled with £NIL balances.

4. Once they do, take out a Vanquis VISA credit card and a Three mobile phone contract (if you don't have a mobile contract already). You should have no problem obtaining these. You should also try applying for a full bank account once you've had the Vanquis account and Mobile contract for six months but don't worry if they're declined.

If you have a basic account with Lloyds, Barclays, or the Co-Operative, don't fret as these appear as full accounts on your credit file anyway so to obtain a new "full" account wouldn't improve your credit worthiness.

Pay the credit card in full each month, preferably by DD, only putting a few small purchases on it instead of using your debit card

One year after completing the IVA all the old defaults / CCJs / IVA Order should fall off your credit file leaving you just with your bank account / mobile contract / credit card. It will be a limited history but a perfect one so shouldn't hamper your chances of getting an 80% mortgage at all. Due to the fact you'll at that point have a limited credit history you'll find it hard to get a higher LTV but as you plan to have 20% to put down this is a non issue.

Good luck! :beer:

Beckwam

I took the IVA out in November 2006, it should have finished in Nov 2011 but I had to extend it as my circumstances changed and u couldn't afford the same payments. Then when it should have ended it turned out I owed additional money because of a salary increase. To cut a long story short, the 4k I'm paying off is the 'additional monies' owed.
So even though it should have disappeared off my credit file back in November 2012 it was still not settled then. So when I spoke to them about settling it now, they said it will clear from my credit file a year after they close it.
Does that make sense?

My in laws will write to my IVA people to say they are gifting me the money to settle it, and they are holding on to the rest of the money they want to give us for a couple of years until we want to apply for a mortgage. So I think that should all be above board!

I had a look at just the Equifax credit report and all that's on it is my Vodafone contract (all clean) and the iva itself. Nothing else is on there at all, I'm guessing because its been nearly 7 years since I took out the IVA...

Beckwam

Oh and thank you for the tips on building up my credit rating, that's really helpful :-)

MoneySaverLog

Beckwam wrote: »

I had a look at just the Equifax credit report and all that's on it is my Vodafone contract (all clean) and the iva itself. Nothing else is on there at all, I'm guessing because its been nearly 7 years since I took out the IVA...

Correct, the IVA remains until completion where its run over more than 6 years. So when you get the completion certificate you could contact the credit reference agencies and ask that they remove the IVA then.

Beckwam

MoneySaverLog wrote: »

Correct, the IVA remains until completion where its run over more than 6 years. So when you get the completion certificate you could contact the credit reference agencies and ask that they remove the IVA then.

Wow - if I really can do that then that's fantastic! That will mean the whole time we're saving I can also be building my credit rating back up.

Are there any current accounts that will have me?

izools

Excellent!

The only difficulty is that you won't find a mortgage underwriter willing to lend to you with nothing other than a Vodafone contract on your credit file - you'll need an absolute bare minimum of 12 months history with a credit card.

Given nothing else appears on your file, once the IVA is removed you should have no difficulty getting a mainstream current account from anyone. Literally. Although you may want to avoid a bank account with any banking groups you had written in to your IVA.

You could take out two sub prime cards at once, too, Vanquis and maybe Capital One Classic, to help build a more thorough credit history more quickly. You'll still want them open for 12 months though before you're likely to be considered for a mortgage. Once you can see the IVA has disappeared from all three credit files I'd apply for the bank account first, then capital one classic, then vanquis. You can do them all in the space of a few days but in that order as the bank will be more fussy about previous searches that those credit card companies.

Best of luck! :beer:

Beckwam

Brilliant. I don't mind that it will take at least a year as it will take us over a year to save up the other 20k we will need for more deposit and to cover moving costs.
Also hubby is going to have to sort himself out with a job on a permanent contract ASAP I would imagine as he's been on a rolling 6 month contract for 2 and a half years now :-/
So lots of work to do and back to my mum and dads house for a year or so (but they will love getting to live with their grandson while he's little!) but it will so be worth it as I never thought I'd be in any position to buy a house!

Thanks everyone, this has been so helpful x

plymouthpafc

I'm over 2 years away from completion but am already contemplating prospects post IVA, like where I'm going to be able to live! Thanks for such an informative post. I'll be sure to keep that on file.

izools wrote: »

I agree with FiatFan here, the record of the fact you entered into the IVA will remain on your credit file from six years the IVA started irrespective of when it's settled.

The best bet is to have the in laws keep a hold of the money and continue paying the IVA as to pay it off soon wouldn't enable you to get a mortgage any sooner.

Once the IVA is settled you will need to do some things:

1. Obtain a copy of all three credit files (Experian, Equifax, Call Credit)

2. Write to everyone who appears on it to request that they

a) mark the default date of the accounts no later than the day the IVA was agreed

b) mark the accounts as settled with a settlement date no later than the IVA was settled

c) ensure the IVA order itself shows as satisfied / discharged. You may need to send proof of completion from your IP to each credit reference agency

3. Keep an eye on your credit files and wait until all the accounts and IVA order appear correctly as above e.g. closed and settled with £NIL balances.

4. Once they do, take out a Vanquis VISA credit card and a Three mobile phone contract (if you don't have a mobile contract already). You should have no problem obtaining these. You should also try applying for a full bank account once you've had the Vanquis account and Mobile contract for six months but don't worry if they're declined.

If you have a basic account with Lloyds, Barclays, or the Co-Operative, don't fret as these appear as full accounts on your credit file anyway so to obtain a new "full" account wouldn't improve your credit worthiness.

Pay the credit card in full each month, preferably by DD, only putting a few small purchases on it instead of using your debit card

One year after completing the IVA all the old defaults / CCJs / IVA Order should fall off your credit file leaving you just with your bank account / mobile contract / credit card. It will be a limited history but a perfect one so shouldn't hamper your chances of getting an 80% mortgage at all. Due to the fact you'll at that point have a limited credit history you'll find it hard to get a higher LTV but as you plan to have 20% to put down this is a non issue.

Good luck! :beer:

stvincent

Hi izools

Thank you so much for your information, could i ask a silly question. Can you not start the process of writing to credit reference agencies to clear the IVA until you get your certificate of completition from your IP. My IVA ends next month(Oct 13), but have been told with PPI checks i wont get completition certificate until roughly 6 months,

so do i need to hold fire with writing to the credit references agencies to get my credit files amended and applying for credit card/bank account to repair my credit rating for a mortgage? until i get my completition certificate or can i start after my final IVA payment this month?

Many thanks for any help and advice