mortgage - IVA and DRO

jessicathompson198

Hi

I have a IVA and a DRO on my credit file, my IVA completed two months after it was set up on18th of August 2023 and completion date: 30/10/2023. DRO was set up on the 24/04/2024 - 18/10/2024 but my DRO was revoked that's what it says on my file. Would I be able to get a mortgage next year with having these on my credit file. My credit score has increased over last year and start of this year. I know they stay on for 6 years but i was wondering if I can get a mortgage or would I have to wait till there completely off my credit score. I have paid off my other accounts that were out standing credit and my score seems to be going up.

My partner has good credit and he might be able to get a mortgage but it would be better if I could see if I could try too.

fatbelly

I'm going to suggest this gets moved to the mortgage board as they will give you a better answer there.

I can't see this being very easy with 2 insolvencies on your file but they are the experts

ACG

You probably can but…

As you have 2 insolvencies in the last 3 years and have been discharged less than 3 years, your options will be limited. It wont be high street rates and deposit wise, im not sure. I reckon as a minimum you might need a 30% deposit, but dont hold me to that you might get away with less.

Im not asking you to provide information, but having 2 insolvencies is not normal (I do mostly adverse and the only time I have ever seen anything similar was an IVA and then bankruptcy and they were miss sold the IVA which failed as they were not working so no means to pay it). With an explanation we managed to get that through at 90% LTV at about 1% above the high street but they had been discharged for 3 years. In 15 years as a broker doing adverse, thats the only time I have seen something similar. Any lender is probably going to want to understand what has happened there.

But if you were to wait until 3 years discharged you would have more and cheaper options.

jessicathompson198

My IVA and DRO where due to my ex husband at the time saying this was the only way I would get out of debt the IVA worked for sometime and then I lost my job at the time, therefore couldn't afford to pay the IVA so had to be cancelled. The DRO stopped as the insolvency register found out that I got a small inheritance from my grandad so they revoked my DRO - I got £2k off my grandad so the DRO was cancelled straight away due to that as they could see that I could afford to pay my bills. I think I have probably been mis sold both IVA and DRO due to financial abuse from my ex husband.

Me and current partner are not looking for a mortgage till next spring, It was just enquiring to see if I could get one, I have been watching my credit score over the last few years to see if it can progress paying accounts on time and making sure all accounts are paid. Making sure everything is up to date but I do have explanation for the DRO and IVA.

ACG

Dont worry about your score. You wont be looking at lenders who credit score.

Instead you will be looking at adverse lenders or maybe small building societies who credit check. That means they are looking at your payment history as a whole. In essence they will be looking at a 6 year credit history and hopefully just seeing a "blip" for maybe 12-18 months by the sounds of it.

So long as the DRO/IVA are within criteria, you are doing what you can, you will have 2+ years clear and an explanation.

At 2 years clear, you can probably get above 70% LTV. Rates will probably still be on the higher side though, but if you were to do a 2 year deal, by the end of the 2 years you should have more options as you will have been clear for 4 years.

jessicathompson198

Thank you for that, that helps a lot.

Would you say its probably best to wait another year before we try and get a mortgage by next year we should have £25k in savings but would you wait another year given my IVA and DRO status?

We currently rent so would have to have a word with the landlord to see if we could extend, as I think they might want the property back next year.

ACG

https://forums.moneysavingexpert.com/discussion/comment/81864390#Comment_81864390

Its really dependent on what you want.

Financially, you will be paying a higher rate, but at least some of that repayment will be going towards the balance. If you have cheap rent, I would probably hold off. If you are paying more or less market rate for rent then if it is anything like around where I live, you would likely be better off paying a higher rate mortgage.

However there is more than just rent/repayment, do you think house prices will go up/down. Your landlord will likely play a big part in any decision too.

I HATED renting. A letting agent wanting to come and view the property at the drop of a hat twice a year, any problems and I had to call the letting agent who were only around until 5pm. Nightmare! At least in my house I make the decisions.

jessicathompson198

The rent for the house is £650 pcm but the house will be going for sale next year as it could do with major repairs on it and my landlord doesn't want to pay so they would like to just sell the property. They have another property too and have told us next year they will be selling all as they don't want to own the houses anymore costing too much money.

Personally I would like to move to be closer to my family rather than live 40 to an hour away from them, so yes for us it would be next year unless we can find another property to rent.

Just out of curiosity would shared ownership be better for us or do you need a perfect credit score for that.

ACG

It might be an option. I dont do huge amounts of shared ownership so I am not the most knowledgeable on that front. But shared ownership typically comes at a premium.

I would get your credit reports infront of a broker to be honest. I have a reasonably good idea of what can be done from what you have said, but the devil is in the detail.