IVA Mortgage Articles
This article is very helpful for you who are looking for a mortgage but have taken an IVA or Individual Voluntary Arrangement. You will see the facts that you have to grasp prior to make your decision on taking the right mortgage for you with your present situation.
Let’s start with the basics of IVA Mortgages
IVA mortgages are made especially for people who want to manage their debt repayment but have entered an IVA.
What is an IVA?
An IVA is a contract between a borrower and the creditor(s) that creates an option to bank bankruptcy. IVA will put a limit and lessen the level of the client’s debt by resetting the amount of repayment every month, so it can be paid off in five-year period. The debt will then be cleared by the end of five-years. IVA mortgages are intended for people in these situations.
An IVA is voluntary for the debtors and their client. Creditors may not agree to an IVA if the client’s debt is very high, and the client’s will be thinking of bankruptcy as the only option. To make the IVA works, creditors who represent 75% of the debt must agree to the IVA. Whether it is an IVA or bankruptcy, you should get an advice from a debt counselor prior to making any decision. The counselor may lead you to sources of advice on IVA mortgages. You should enter into an IVA with the help of a licensed Insolvency Practitioner.
Reducing the debt level by 75% is possible and also clearing the debt in 5 years, but it still has some boundaries. Since IVA is a legal binding agreement, it will influence your credit score. You will have a limited ability to get credit like a loan or mortgage. Therefore, you will need IVA mortgages.
Mortgages and IVA
An IVA can influence your credit score, and also your ability to expand your credit, including a mortgage. On the other hand, there are many special lenders who offer IVA mortgages for people who have taken IVA. Like a bankruptcy, IVA can affect your credit score, but the problem is, it remains there for six years after it has been paid off. The only mortgage that you can only obtain is IVA mortgages. You can only go to the special lender to get an IVA mortgage when your IVA is paid off, and you will still have a special terms and conditions. The lender will look into your credit report to find any arrears and CCJ, as well as repayment record. Since you will be considered as a high risk client, you will have to pay a higher rate of interest. But it is the only mortgage that you can get which can mend your credit score to a good condition, so that you can remortgage with a lower rate in the future.
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