www.iva.co.uk

can i get a mortgage whilst on an IVA?

Hey Lau, welcome to the forum. It's not impossible but probably quite difficult.

Lenders are very wary and you would more than likely pay a high rate of interest and have to contribute a hefty deposit. Then there are the other costs that you would have to find too.

There is an expert on here that you could contact, Andrew Graveson from www.brightoak.co.uk He may be able to fully explain everything to you.

Of course, your IP will need to know where the money for the depoit etc is coming from and that there was not going to be any extra expenditure that would jeapordise your IVA.

Please wait for an expert as this is only my opinion.

Viki X

It is nigh impossible at the moment to find a mortgage of any higher than 80% loan to value, with the background of adverse credit. So in order to qualify for a mortgage, you would need to find a deposit of at least 20% which if you are in an IVA would have to come from a third party.

Another key point here is that as well as a 20% deposit you would need to be prepared for interest rates that are very high at the current time compared to what would have been the case a few months ago.

Some readers of the site might be interested to know that there is one lender potentially offering a uniquely good rate to borrowers in IVA's. The rider is that it is for a maximum loan of 65% of the property's value but this could be useful for some individuals in IVA's with fixed/discounted rates coming to an end some years before the end of the IVA.

It's available where the lender considers that they can assist someone in rebuilding their finances following an unfortunate event such as redundancy, divorce, or ill-health.

I suspect that the low loan to value limit will mean this isn't a viable solution for many but thought in these tough mortgage times it was worth sharing in case it was of use for somebody.

Will things get worse before they get better do you think Andrew?

Debbie

Hi Andrew
It's all a bit concerning.
I am on a fixed rate ending May 09,but with house prices falling will probabaly only have 15% equity.I may well have to stick with a variable rate until prices pick up.
Regards

From my perspective there are two things that will need to happen before there is a significant recovery:

1 - Lenders will want to understand that we are experiencing a housing price readjustment rather than a full-blown crash. That's going to wash out with time.

2 - Lenders and other banking institutions will want to understand better the losses they face as a result of their investments in poorly performing mortgages previously sold in the USA (and now here as well). Again this will sort itself out over time as the losses become apparent.

If it's found that the housing market is dipping rather than crashing, and the subprime losses were not as bad as feared, I suspect we'll see a significant recovery in the mortgage markets. After all, these institutions make their living from mortgages; if possible they want to be writing mortgage business.

If house prices reduce significantly and sub-prime losses are found to be worse than feared then we're probably in for a long and painful ride.

The last couple of weeks have seen a further worsening of the mortgage market from the perspective of borrowers and I'm not sure we've hit the bottom yet. The danger of course is that this all becomes a self-fulfilling mess. The lack of mortgage availability and unwillingness of individuals to buy houses in a declining market leads to a house price crash, and the worsening mortgage terms available lead to further mortgage losses as people become unable to meet their commitments. As well as being awful for homeowners this will be awful for lenders.

Very difficult to predict with any confidence how this will all work out but I think it's safe to say nothing is going to improve significantly very soon.

I trust that IP's and creditors will find ways to make sure that those who are doing their level best to repay their debts via an IVA are treated fairly where their mortgage costs spiral in a way that was never anticipated by anyone. After all, many of these creditors are also involved in mortgage lending. Hopefully they'll use their power and strength to be part of a solution.