www.iva.co.uk

Having established that I qualify for an IVA I now need to understand fully the implications of going ahead. For over 15 years I have been living as a single person in privately rented accommodation, and I can see real difficulties if in the next 5 years I wanted to obtain a property as a first time buyer and possibly even start a family with my girlfriend (if I am ever going to do either of these I can't necessarily wait another 5 years, unfortunately!). I've heard that it is still theoretically possible to get a mortgage in these circumstances, but experience shows it is difficult enough for first time buyers even with a reasonable credit score (as mine just about still is as I have not 'defaulted' on any payments yet, although this is only really possible by transferring some balances from one credit account to another - completely untenable over the long-term). If unsecured borrowing is not allowed during the period of the IVA, and my credit rating is affected even after the IVA is completed, I just don't see how in practice I would be able to get any kind of mortgage in the 5 years the IVA lasts, even assuming fairly secure, full-time employment.

I can get some financial help from my family if necessary to cover a deposit, but I'm not sure how much real difference that would make. What factors should I be taking into account, please, in terms of priority? Is there anyone I can turn to for further practical guidance? Many thanks.

Talk to Finebridge, they gave me brilliant, impartial advice.

hello and welcome
I would talk to several companies and you will get a feel for it and whats involved, make sure you talk to an actual IP. There are some cowboys companies out there who are waiting to rip people off and ask for months and momths of upfront fees. The companies on this website are OK. The most important thing at this stage is to make sure your expenditure is realistic for a five year stint, whatever company you choose. Be sure to include dentist/presciptions and contingencies, you will need this. I am not an expert, just another person in debt, I am sure that you will be able to obtain a mortgage but at a slightly higher interest rate than normal, also you will need your family to give you a deposit, I also believe that if your mortgage inflates your outgoings, it may not be acceptable to your creditors and may be refused. Someone else is sure to clarify this for you. Finally do not be ashamed, your IP should be working with you and your creditors and will earn from your IVA.

Good luck and keep posting.

LILY

Hi rogers

It seems from your post that you are asking for specific advice as to whether you could have a mortgage whilst subject to an IVA.

The answer to that is yes, but probably only up to 90% loan to value - for instance if you wanted to buy a property worth £100,000 you woul need to find at least a £10,000 deposit.

Providing your new mortgage payments were no more than the rent you are now paying, there should be no problem in getting your Supervisor's permission for this.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

It is relatively easy to obtain a mortgage whilst in an IVA as long as you have a deposit from a third party[familt etc]and you have your IPs permission.You also need to make sure that the mortgage payments are no more than your current rent payments.
It is actually easier to obtain a 90k mortgage on a purchase of 100k than it is to get a 5k unsecured loan[if your IP allowed it]

I'm really grateful for all the advice tendered, which I shall follow up. With respect to what Neverending is saying, the problem is that in my case I think it is inevitable that the mortgage payment would be higher than my current rent, even at the lowest end of the housing market. As things stand I am likely to pay off, or nearly pay off, the existing debt, through the IVA, in 5 years. With ANY mortgage I will not be able to do that, although I should still [theoretically] be able to pay off the greater part of it. So the question is, will my creditors be in a position to block any mortgage arrangement I may otherwise make, or should my IP/Supervisor be able to work on my behalf to broker a revised 'deal' with them within the IVA framework?

Hi
I will try and explain exactly how an IVA works so that you can better understand the answer relating to a mortgage whilst in an IVA.
Your quote "As things stand I am likely to pay off, or nearly pay off, the existing debt, through the IVA, in 5 years."
If you enter into an IVA then you agree to pay your disposible income to your IP for 60 months.At the end of this time your creditors will write off the remaining part of your debt and you will owe NOTHING.It is a legally binding agreement.
Quote " With ANY mortgage I will not be able to do that, although I should still [theoretically] be able to pay off the greater part of it."
Your IP will not agree,nor will your creditors,to a mortgage if it will either reduce the amount that you can pay into your IVA or use extra money earned that would otherwise be paid into your IVA.
This is why you cannot extend your housing costs by the way of a larger mortgage payment, compared to your current rent payment.
I hope that this helps you.
Regards

neverending wrote:

Your IP will not agree,nor will your creditors,to a mortgage if it will either reduce the amount that you can pay into your IVA or use extra money earned that would otherwise be paid into your IVA.

Thanks it certainly helps me concentrate the mind! However I am just a little confused now about what Melanie was saying about the need to find a 10% deposit. I live in London, so it is unlikely that I will find a habitable property for less than 90k. Whatever I buy, it seems to me I will be paying more for the mortgage than I would in rent, even if it is not that much more, but in addition I will be paying for gas, electricity, Council tax etc. Is there no way forward on this?

Rogers

I do not think that buying is an option for you within an IVA, as you will need to find a deposit based upon 10% of the value of the property you want to buy. As you live in London that is likely to be a significant sum.

You will need to do the sums before applying for an IVA, as your Supervisor will not let you mortgage after the agreement has been accepted at the risk of your contributions being affected.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

As a follow on question to that can I ask if the following would apply. If during my IVA I met somebody and wanted to get a joint mortgage. If they had the 10% deposit either in cash or through equity in a current property and my contribution was no more than my rent would that satisfy the requirements.

Hi David

That would be absolutely fine. If you meet a new partner and decide to settle down together, there would be nothing stopping them putting down the deposit - although for their own security do get a declaration of trust drawn up which identifies the deposit monies as being paid by that person. This protects you both for the future in the event of separation, or dare I say it a future debt problem!

So long as your share of the mortgage payment, and other related household costs, did not disturb your ability to fund your IVA contributions, I think your Supervisor would be delighted to provide you with permission to take on a credit agreement, and wish you well for the future.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

Hi Melanie

Thanks for clarifying that. Sadly its only a "what if" question at this stage but you never know.

Dave