H2B Mortgage 3 years after settling IVA

Dannygee22

Hi all,


I am currently looking at purchasing a property in September/October this year. (3 years after settling an IVA with a lump sum payment).


I have been receiving some very conflicting advice on whether this is possible, and have been speaking to financial advisors who have confused me even further.


I did an affordability check with one based on the fact that my IVA would have been settled for 3 years, and he informed me that I would be able to borrow from some high street lenders after this date, and gave me a top end mortgage figure.


My wife and I then went to see a few new build properties, and found some we liked. The developer has an IFA they use that we must be qualified by, so I thought it best to have an initial conversation with them explaining my circumstances. The Advisor I spoke to was extremely dismissive and told me no chance until 6 years has past. However, he did say, if I could go to him with an AIP from a mortgage company that would be enough to be qualified. I went back to my Financial advisor, explained the situation and asked for a re-check. He informed me that I could borrow at this time, but his initial calculations were incorrect, and that I could only borrow 80% LTV using Help 2 Buy.


I am now even more confused than I was before. He told me it had nothing to do with my financial situation, but to do with affordability checks. The calculation he used was -


My Salary + My Wife's salary X 4.5 /0.80 which gives an 80% LTV.


However, the initial calculation he gave me was


My Salary + My Wife's salary X 4.5 /0.75 which gives a 75% LTV (obviously this one comes up as a higher figure.)


Everywhere I have looked online, the 75% LTV figure appears to be correct, so I'm struggling to understand where the 80% has come from. I have got back to him but as of yet have had no response.


So I have 2 questions -


1. 75% LTV calculation is the correct one to use when working out affordability on Help to Buy, am I right?


2. Has anyone had experience of a Help to Buy mortgage being agreed 3 years after a settled IVA? Is this possible.


Any help or advice you could offer would be greatly appreciated. I was in a Debt Management Plan since 2008, and the IVA was meant to be the light at the end of the tunnel. I was so pleased the day I settled it, but that seems to have made very little difference. I have missed no payments on anything since 2008, and I am using a credit builder credit card to try and get my credit rating up, but that is proving slow going.
Desperate to be able to finally provide my family with a secure home after renting for all these years, so any advice offered would be amazing.


Thanks

sal_III

The x4.5 calculation suggest to me that you are talking about mortgage affordability. the HTB equity loan affordability is separate and much more stringent.

Just look at the official calculator, put in the numbers and see what it says:

https://www.gov.uk/government/publications/homes-england-help-to-buy-equity-loan-calculator-and-guidance

In any case it will be affordability factor only, regarding the IVA it will be the lender's criteria. AFAIK HTB agency doesn't do credit or income checks, they rely on the mortgage Lender to do them.

Neutrinno

As above, it may be conflicting advice on HTB affordability. Lenders have their own affordability calculations which are completely different to HTB's.

As for the IVA; you won't be eligible for a high street HTB mortgage until six years have passed from the date you entered the IVA (provided it's completed). This is when it will naturally drop off your credit file. This isn't to say though that you have no options now. I can think of a couple of lenders off the top of my head who will lend up to 70%-75% on HTB basis provided the IVA is 2-3 years discharged. You are best using a broker who has experience in adverse credit/IVA mortgages.

kingstreet

You can borrow the LOWER of the Government's HTB calculator output and a lender's. It doesn't matter if one says you can buy for £50k more as you have to use the lower output of the two.

As Neutrinno says, there are a couple of high street lenders who will consider former IVA holders when six years or more from registration, not settlement.

If doing lender calculators yourself, ensure the equity loan and ground rent/service charge costs are entered somewhere. If there is no obvious place, use a space for a credit commitment and take 3% of the equity loan divided by 12 and add any ground rent and service charges to that.

For example, the Halifax calculator doesn't ask so you would enter a commitment of £150 for a £60,000 HTB loan and add to that £25 if there is a £300 pa service/estate charge.

Nationwide's does ask, so you would simply choose the correct option "equity share" and the correct loan amount or share amount.

Dannygee22

That is all great advice, thanks. You have given me hope, at least I know it is possible. I have found a mortgage advisor who specialises in adverse credit, and the affordability calculator confirms my findings.
Many thanks!