IVA Remortgage Rates

What Remortgage Rates Are Available With an IVA?

Remortgage rates for borrowers with IVAs vary considerably depending on individual circumstances, but understanding the typical ranges can help you set realistic expectations and plan your finances effectively.

The specialist lending market for IVA borrowers has matured significantly in recent years, with increased competition among specialist lenders driving rates down from the levels seen a decade ago. However, rates remain higher than mainstream products due to the additional risk that lenders take on when lending to borrowers with insolvency history.

As a broad guide, you might expect the following rate ranges above the Bank of England base rate:

Active IVA. Borrowers with active IVAs face the highest rates in the specialist market. Rates typically range from around 5 to 9 per cent, depending on equity, payment history and the specific lender. The limited number of lenders willing to consider active IVA applications means competition is lower and rates are correspondingly higher.

Recently completed IVA (within two years). Once your IVA has been completed, rates improve noticeably. You might expect rates ranging from around 4 to 7 per cent, with the lower end available to borrowers with strong equity positions and clean credit behaviour since the IVA was registered.

IVA completed two to four years ago. With more time since completion and evidence of credit rebuilding, near-prime lenders begin to enter the picture. Rates in this category typically range from around 3 to 5 per cent, moving closer to mainstream territory.

IVA completed four to six years ago. As the IVA approaches the point where it drops off your credit file, rates continue to improve. Borrowers at this stage may access rates from around 2 to 4 per cent, particularly if they have rebuilt their credit effectively and have good equity.

IVA dropped off credit file. Once the six-year period has elapsed and the IVA no longer appears on standard credit searches, you may qualify for mainstream rates, provided no other adverse credit is present. At this stage, your rate should be determined by your LTV, income and current credit score rather than your historic IVA.

These ranges are indicative and can shift with market conditions, the Bank of England base rate, and individual lender policies. A specialist broker can provide you with accurate, up-to-date rate information based on your specific circumstances.

Factors That Affect Your IVA Remortgage Rate

Several key factors influence the interest rate you will be offered when remortgaging with an IVA. Understanding these factors can help you identify areas where you might be able to improve your position and secure a better rate.

IVA status and timing. As outlined above, whether your IVA is active, recently completed, or close to dropping off your credit file is the single most significant factor affecting your rate. Each progression in status typically opens up more lender options and better rates.

Loan-to-value ratio. Your LTV is the second most important factor. Specialist lenders price their products in LTV bands, with significant rate improvements as your LTV decreases. Common bands include 85, 80, 75, 70, 65 and 60 per cent LTV, with rates stepping down at each threshold. Moving from one band to the next, even by paying down a small amount of your mortgage, can unlock a noticeably better rate.

Additional adverse credit. If you have other marks on your credit file in addition to the IVA, such as defaults, CCJs, or missed payments, rates will be higher than for a borrower whose only adverse credit is the IVA itself. The severity and recency of any additional adverse credit will influence how much extra you pay.

Income and affordability. Your income level and the affordability of the proposed mortgage payments affect both the rates available and whether you qualify for certain products. Higher-income borrowers may access better rates because lenders view the mortgage as more sustainable.

Property type and location. Standard property types such as houses and purpose-built flats typically attract better rates than non-standard construction, ex-council properties or flats above commercial premises. Similarly, properties in areas with strong housing markets may be viewed more favourably.

Deal type and term. Fixed rate products may carry a slightly higher initial rate than variable or tracker products, but they offer payment certainty. Shorter fixed terms of two years are generally available at lower rates than five-year fixes, though the best option depends on your plans and risk tolerance.

Lender appetite and competition. The number of specialist lenders actively competing for IVA cases at any given time affects overall pricing. When more lenders are in the market, competition drives rates down. When fewer lenders are active, rates tend to increase.

How IVA Remortgage Rates Compare to Standard Rates

Placing IVA remortgage rates in context by comparing them to standard mainstream rates helps you understand the true cost of your adverse credit and can inform decisions about when to remortgage and when to wait.

The difference between IVA specialist rates and mainstream rates is often referred to as the adverse credit premium. This premium compensates lenders for the additional risk of lending to borrowers who have experienced financial difficulties severe enough to require a formal insolvency arrangement.

To illustrate the impact, consider a mortgage of two hundred thousand pounds over twenty-five years. The difference between a mainstream rate and a specialist IVA rate can translate into significantly different monthly payments:

• At a mainstream rate - Monthly repayments would be at the lower end, reflecting the lender's confidence in the borrower's creditworthiness
• At a specialist rate for a completed IVA - Monthly repayments would be higher, but potentially still substantially below the standard variable rate that many IVA borrowers are paying
• At a specialist rate for an active IVA - Monthly repayments would be at their highest, reflecting the maximum risk the lender is taking on

The critical comparison for most IVA borrowers is not between the specialist rate and the best mainstream rate, but between the specialist rate and their current standard variable rate. Many homeowners who have fallen onto their lender's SVR after their previous deal expired are paying rates that are higher than what specialist lenders offer, even accounting for the IVA premium.

For example, if your SVR is 7.5 per cent and a specialist lender offers you a two-year fixed rate at 5.5 per cent, the specialist rate is clearly the better option despite being above mainstream levels. Over a two-year fix on a two hundred thousand pound mortgage, that two per cent saving could amount to several thousand pounds.

It is also important to consider the trajectory. If you remortgage onto a specialist deal now and then remortgage again when your IVA drops off your credit file, you may be able to step down to mainstream rates at that point. The short-term cost of the specialist rate can be viewed as a bridge to better long-term pricing.

Fixed vs Variable Rate Options With an IVA

When remortgaging with an IVA, you will typically have the choice between fixed rate and variable rate products. Each has advantages and disadvantages, and the right choice depends on your individual circumstances, your attitude to risk, and your plans for the near future.

Fixed rate products. A fixed rate locks in your monthly payment for a set period, usually two, three or five years. This provides certainty and protection against interest rate rises. For IVA borrowers, this predictability can be particularly valuable, as it allows you to budget confidently and avoid any further financial strain from unexpected payment increases.

Fixed rates are generally the most popular choice among IVA borrowers for several reasons:

• Payment certainty - You know exactly what your monthly payment will be throughout the fixed period
• Budgeting simplicity - Fixed payments make it easier to manage your finances and maintain other financial commitments
• Protection against rises - If the Bank of England base rate increases, your payment stays the same
• Defined remortgage point - At the end of the fixed period, you can reassess your options, and by then your IVA may have dropped off your credit file

Variable rate products. Variable rates, including tracker rates that follow the Bank of England base rate at a set margin, may start lower than equivalent fixed rates. However, they carry the risk that your payments could increase if interest rates rise.

Variable rates might suit IVA borrowers who believe interest rates are stable or likely to fall, who want the flexibility to remortgage again quickly without paying early repayment charges, or who have sufficient financial buffer to absorb potential payment increases.

Short-term fixed rates. For many IVA borrowers, a two-year fixed rate represents a good compromise. It provides payment certainty for a manageable period, and at the end of the fix, you can reassess your position. If your IVA has dropped off your credit file or your credit score has improved during the fixed period, you may be able to move to a significantly better deal at that point.

Discuss the options with your broker, who can model different scenarios and help you understand how each choice would affect your payments under various interest rate conditions. The right decision depends on your personal circumstances and risk appetite rather than there being a universally correct answer.

How to Get the Best IVA Remortgage Rate

While having an IVA limits your options compared to borrowers with clean credit, there are still meaningful steps you can take to ensure you secure the best rate possible for your circumstances.

Maximise your equity. Because LTV is such a significant factor in rate pricing, anything you can do to improve your equity position will help. Consider making overpayments on your existing mortgage if your current deal allows them, and be aware of which LTV band you fall into. If you are just above a threshold, a small reduction in your mortgage balance could move you into a lower band and unlock a better rate.

Maintain impeccable payment behaviour. Lenders will scrutinise your payment history during and after your IVA. Ensure every mortgage payment, IVA contribution and other financial commitment is paid on time and in full. Even one missed payment during this period can significantly affect the rates available to you.

Rebuild your credit actively. Take proactive steps to rebuild your credit score. Use a credit builder card responsibly, register on the electoral roll, and ensure your credit report is accurate and up to date. A higher credit score, even with an IVA on your file, can influence the rates specialist lenders offer.

Use a specialist broker. The importance of using an experienced adverse credit broker cannot be overstated. Different specialist lenders price their products differently, and a broker who knows the market can identify which lender offers the best rate for your specific combination of circumstances. They can also present your application in the best possible light.

Consider the total cost, not just the rate. A slightly higher interest rate with lower fees can sometimes be cheaper overall than a lower rate with substantial arrangement and broker fees. Ask your broker to compare the total cost of different products over the deal period, including all fees, to identify the genuinely cheapest option.

Time your application strategically. If your IVA is due to complete in a few months, or if it is about to move into a new year since registration, waiting a short while before applying could unlock better rates. Your broker can advise on whether timing could make a material difference.

Compare product transfer options. Before looking at external lenders, check what your existing lender offers by way of a product transfer. Some lenders will offer existing customers a rate switch without a full credit search, which could provide a competitive rate without the costs and complexity of a full remortgage.

Fees and Total Costs to Consider

When evaluating IVA remortgage rates, it is essential to look beyond the headline interest rate and consider the full cost of the remortgage. Various fees and charges can significantly affect the true cost of the deal, and overlooking them can lead to a decision that appears cheaper on the surface but proves more expensive overall.

Arrangement or product fees. Many specialist lenders charge arrangement fees for their mortgage products. These can range from a few hundred to several thousand pounds and may be payable upfront or added to the mortgage balance. If added to the balance, you pay interest on the fee for the life of the mortgage, which can substantially increase the total cost.

Broker fees. Specialist adverse credit brokers may charge advisory fees for their services, typically ranging from five hundred to two thousand pounds. Some brokers earn their income through commission from the lender rather than fees charged to you, so it is worth asking about the fee structure before engaging a broker. Be wary of brokers who charge large upfront fees before any work has been done.

Valuation fees. The lender will require a valuation of your property, and this fee is usually paid by you. The cost depends on the property value and the lender requirements. Some specialist lenders offer free basic valuations as part of their product offering.

Legal and conveyancing fees. Remortgaging involves legal work to register the new mortgage and release the old one. Solicitor or conveyancer fees for a remortgage typically range from three hundred to eight hundred pounds. Some lenders offer free legal services through their panel solicitors.

Early repayment charges. If your current mortgage is still within a fixed or discounted rate period, you may face early repayment charges for leaving before the deal period ends. These charges can be substantial, often ranging from one to five per cent of the outstanding mortgage balance. Factor this cost into your calculations to ensure the remortgage still makes financial sense.

Exit fees. Some mortgage lenders charge a small exit or deeds release fee when you leave, typically around one hundred to three hundred pounds. Check your current mortgage terms for details.

When comparing deals, ask your broker to provide a total cost comparison that includes all fees, the interest payable over the deal period, and any early repayment charges on your existing mortgage. This gives you a true picture of which option is genuinely the most cost-effective, allowing you to make a properly informed decision.