IVA and Mortgage

zapbrannigan · 23 January 2019 at 11:18PM

Hi all. I'm after some honest and hopeful help in relation to my status. I have an IVA that was approved and started in April 2018. My wife and I of 7 years currently rent and desperately want to buy our own home as our rent is so expensive. I'm 47 and used to own a house with my ex over 11 years ago so I'm technically not a first time buyer but my wife has never owned a house. I'm eligible for the Help to Buy scheme until April 2022 which is when they stop non first time buyers from being accepted. Ive been offered a mortgage after April 2019 when my IVA is over 12 months in, but only a 65% LTV which means I would have to stump up 15% deposit (20% from government), increasing to a 70% LTV after April 2020 when my IVA is over 24 months old so that reduces our deposit to 10%. We really need to move to a cheaper rental for a year or so to save, but I worry that this would have a negative impact on my credit score. The mortgage lender doesn't care if my IVA is settled or not. I'm also aware time is ticking for me to get a mortgage and the April 2022 deadline. A rough idea mortgage quote (not offer) we got for a 75% LTV was the same as our rent, based on a worst case scenario of around 6% interest, so you can imagine we are both soo frustrated with the situation. I pay our rent via Credit Ladder to help improve our credit rating and show a good history, even if my credit rating is low I would have hoped this would have helped.

Does anyone have any recommendations for mortgage lenders that would look at a higher LTV for us?

I'm in full time employment with a very large company for over 20 years and a stable home so we're a pretty good risk I would have hoped, and the IVA was something I had to do for my own sanity and future financial stability.

Thank you for any advice.

foxy-stoat · 24 January 2019 at 1:07PM

1. You wont be able to take on any new debt while in the IVA
2. You shouldn't be able to save any money while in the IVA

You need to put the idea about buying a property until at least the end of the IVA.

If you move to a cheaper rental now you will not be able to save anything as the amount you are left with each month should be the same while in the IVA.

I hope that helps.

memberme · 24 January 2019 at 2:48PM

I don't agree fully with point 2 above.
I finished my IVA in 2016 and I'm not saying everyone is in the situation, but my IP made it quite clear that if by being further frugal I managed to save a little, then that was good practice and he had no interest in that. the idea of an IVA allowance is not to live on the bread-line counting every slice of bread.
You should not have a great deal of a margin but a margin there often is...a little

Better practice than doing what many do and claiming they smoke (a luxury) and many claim an allowance for it (truethfully or otherwise). It's well known that folk tweak the outdated allowance sheets where they can..

I think to encourage saving where possible (even for the few) is sensible

I do agree that if you move and your rent drops, your payments will increase to negate the move benefit

zapbrannigan · 24 January 2019 at 4:02PM

Hiya. Yeah I've been told about point 2 also that I should be able to save as it shows I'm trying to manage my money better. I'm entitled to save under the Help to Buy ISA and my wife can setup a separate Lifetime ISA as she doesn't have the IVA.

I did wonder about paying off my IVA earlier as I do have that option to satisfy it earlier and then whatever I do afterwards has no bearing with the IP. Of course i will still have the IVA on my record for 6 years after it was approved but that's inevitable.

Thank you both.

foxy-stoat · 24 January 2019 at 4:59PM

To clarify - if you budget £150 a month for energy and it only costs you £130 then yeah save the £20....I meant saving for a mortgage deposit (ie 10+%) on a 6 figure sum.....in practice you will likely be expected to put down 15-20% deposit once the IVA has finished for lenders to look at you for a mortgage.

How can you settle the IVA early 12 months into an IVA? If its outside money, ie family and friends then give it a try as the creditors may accept a full and final settlement offer.

zapbrannigan · 24 January 2019 at 5:18PM

Yeah that's the issue and my whole situation. Saving for a mortgage is near impossible and time is ticking for me to secure a mortgage even at 65/70% LTV. I would look to settle early using funds from a financial gift from a family member. I've got to try it otherwise I'll be out of time for a mortgage and it's frustratung that I'm paying more than a mortgage for a similar property that I would own. I won't go on about how broken the housing market is right now, that's for another topic !! 😉 Thank you.. 🙂

FruitBat · 15 March 2019 at 2:10AM

Unfortunately you won’t be able to unlock the extra 20% in the help to buy ISA as you have previously owned a property. You have to sign a legal document that goes to HMRC that you have never owned a property in the UK or abroad. They will find out with land registry etc. It’s most definitely not worth the risk.

I was in the same situation as you, I owned a house with my ex over 10 years ago, had an IVA but saved in an help to buy ISA. The interest rate is really good so I kept putting £200 a month in.

I have to pay stamp duty because of owning an house in the past so I had to save more money than I initially thought.

IVA and Mortgage

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