As people have said many times here - the banks /building societies have tightned up in their lending criteria.
Unfortunately the question of Have you every enter an IVA or bankruptcy? appears frequently in mortgage application. Must admit it tempting to answer NO to this especially when there is no way of checking on your credit report. Personally as we recent moved 18 month it was mention to our mortgage company. They got back to us and asked if we wanted to remove the answer as there is "no way of checking"
They're quite right, once it is off the register and the cra files there is no way of checking, unless the bank keep historical insolvency records, which you could argue would be in breach of the data protection act. i.e. data is not stored for longer than is necessary.
We're willing to wipe the slate clean, give you a fresh start. All that we're asking in return is your cooperation.
personally if i was a lender i would feel more content to give a mortgage to somebody who completed a iva ,than a younger person with no credit history or experience with credit.i know some people dont learn by there mistakes,but i believe knowing how i feel about debt now, that the majority of people post iva,s would be a safer option.without a shadow of a doubt.so really i feel the bankers are out of touch with the real world and are missing out on sound business opportunity,s.its worth mentioning that a lot of people fall into financial difficulties because of unexpected unemployment.
Mr Blue Sky -- you are quite correct in your opinion -- but the flaw is that the chioce to accept or reject isn't generallly made by a thinking, feeling or compassionate human being, but by a cold, calculating machine (however it is sometimes difficult in financial institutions to tell one from the other!).
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
Unfortunately, the vast majority of lenders have no idea about IVAs and have never experienced being in debt themselves.
I can see why they would be worried - who knows whether it would happen again and we do see posts from people who have successfully completed one IVA and either need another one or have to go BR, sometimes through no fault of their own.
Whilst I accept that we should not be treated as pariahs and should be given a second chance as we have proved we can clear our debts, it is down to the banks as to how they treat us.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
I think that some companies do ask direct questions about IVA or BR but also ask if you have ever made an arrangement with any of your creditors.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
It used to be the case of have you ever been bankrupt, now they seem to be more and more asking the question "Have you ever made an arrangement with your creditors"
We're willing to wipe the slate clean, give you a fresh start. All that we're asking in return is your cooperation.
Whilst i wouldnt suggest you lie on the mortgage application, the fact is the Bank cant/dont hold this information. Therefore you can see the temptation on incorrectly answering that question. Especially if you have set your heart on moving into a house
Maybe it's time to shift the terms of this thread a little. I fully acknowledge that the way mortgage lenders view IVA's today makes little sense and is unfair. However it is what it is.
This isn't just an IVA-specific subject and even in the current difficult lending situation there are steps people can take to help themsleves today and tomorrow. Sorry if, for many people reading this thread, I'm talking about pretty obvious stuff.
Why it isn't IVA specific:
If you have any debt at all it will be factored into an "affordability" calculation that mortgage lenders must make before they lend under FSA rules. Let's say that someone has £20000 on credit cards which they're managing well and are entirely up to date on payments. The chances are that their credit card repayments are £500 per month or so. In broad terms a mortgage lender may deduct this from their income, in addition to their other commitments such as utility bills etc, before they decide how much they might lend responsibly to someone to ensure that they can pay it back. A few years ago the mortgage lender would have just said that they would lend 3.5 or 4 times your income.
Therefore an IVA that has cleared a debt balance will have caused one big problem, but has also solved another that could have been equally obstructive.
If you're on a debt management plan you'll be continuing to carry a debt balance. Mortgage lenders are likely to consider what the repayments would be on contractual terms for the sake of the affordability calculation, not the terms that might have been perfectly acceptable to creditors in a debt management plan. Your credit status might be hit less hard than it would have been by an IVA, but "affordability" will work the other way because you continue to carry a debt balance.
If you are a first-time-buyer with a perfect credit rating you'll need to save up a big deposit (unless you can rely on the "bank of mum and dad") which will prove really difficult when rents are increasing (ironically partly because it's harder to buy) and disposable incomes are being squeezed by inflation and wage stagnation.
In short... it's really hard to get a mortgage.
There are more people willing to take the risk of borrowing than there are willing to take the risk of lending.
You can see the same effect with credit cards. Credit card lenders can obtain funds very cheaply on the money markets compared to a couple of years ago, but the rates that they are lending at have increased by a couple of per cent. Why? Because they can (when more people want to borrow than want to lend).
What you can do:
1 - Clear up your credit file. Mortgage lenders hate unsatisfied "default notices" which are typically issued when you get behind on contractual payments (often around the start of an IVA). They can be marked as being "satisfied" once an IVA has been concluded, though not every lender will get around to doing it. If one of them hasn't done this, call and write to them until they do.
2 - Layer good credit history on top of the previous issues. Recent credit history is very important to lenders. Without any they have nothing to base a decision upon. If you have a mortgage, pay it on time every time. Mobile phone contracts, if you can get one, are useful. The high interest credit cards available to people with poor credit records may also be useful (with the massive caveat that they are only used for amounts that can be immediately cleared upon receiving the bill).
3 - Save up the very biggest mortgage deposit that you can. This will bring the added benefit of...
4 - Time. The more time that elapses the better, and the less significant any previous problems will be. The mortgage market is likely to become a little more "adventurous" at some point as well. Sooner or later someone smart with money will figure out good reliable customers are waiting for them.
5 - Find a good mortgage broker. They have access to lenders you may never have heard of. They have access to lending criteria you'll be unaware of. Some will have contacts at specific lenders who are willing to make a "judgement call" on borderline cases.
I acknowledge that this information will not necessarily be of use to many people today, but taking some positive steps now might well improve the chances of getting a decent mortgage on decent terms in the future.
Andrew Graveson
Bright Oak Ltd
UK Debt Management Company
Website: www.brightoak.co.uk
We are very lucky to have such a wise old sage as Andrew on the forum - and I think many people will understand more about the current state of the lending markets by reading his words.
Excellent post Andrew, thank you for the info it will be most useful for posters on here.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
