Can You Remortgage With an IVA?
Yes, it is possible to remortgage with an IVA, although your options will be more limited than those available to borrowers without adverse credit. The availability of remortgage products depends on whether your IVA is still active or has been completed, how long ago it was registered, and your overall financial position.
An IVA is a formal insolvency solution that remains on your credit file for six years from the date it was registered. During this time, most mainstream high street lenders will decline your application automatically. However, a growing number of specialist lenders actively consider applicants with IVAs and offer products designed for these circumstances.
If your IVA is still active, remortgaging is significantly more difficult because you typically need permission from your Insolvency Practitioner before taking on any new credit. Some IVA agreements specifically prohibit obtaining new credit without prior approval, and breaching this condition could put your entire arrangement at risk.
Once your IVA has been completed, your options improve considerably. Lenders will still see the IVA on your credit file until six years have passed since it was registered, but many specialist lenders will consider your application provided you can demonstrate that your finances are now well managed and stable.
The amount of equity in your property is a crucial factor. Lenders offering products to borrowers with IVAs typically require a lower loan-to-value ratio than standard products, often wanting at least 20 to 30 per cent equity. This higher equity requirement helps offset the additional risk the lender is taking on.
How an IVA Affects Your Remortgage Application
Understanding exactly how an IVA impacts your remortgage application is essential for managing your expectations and preparing effectively. Lenders assess IVA applications differently from standard applications, and knowing what they look for can help you present the strongest possible case.
Credit score impact. An IVA will significantly lower your credit score, often by several hundred points. This reduced score is one of the primary reasons mainstream lenders decline applications from borrowers with IVAs. However, specialist lenders use manual underwriting rather than purely automated scoring, which means a human assessor reviews your application rather than a computer simply rejecting it based on a number.
Time since registration. Lenders pay close attention to how long ago your IVA was registered. The more time that has passed, the more favourably they view your application. An IVA that was registered five years ago will be viewed very differently from one registered just twelve months ago.
IVA status. Whether your IVA is active, completed, or has been on your credit file for several years makes a significant difference. Active IVAs present the greatest challenge, while completed IVAs that are close to dropping off your credit file present the least difficulty.
Payment history since the IVA. Lenders want to see evidence that you have maintained all your financial commitments since entering the IVA. Keeping up with your IVA payments, your existing mortgage payments, and any other obligations demonstrates financial responsibility and rebuilding of trust.
Equity position. A strong equity position is one of the most important factors in securing a remortgage with an IVA. The more equity you have, the more options become available and the better rates you can access. Lenders see higher equity as reducing their risk, which makes them more willing to lend despite the adverse credit history.
Reason for the IVA. Some lenders will consider the circumstances that led to your IVA. If it resulted from a specific life event such as redundancy, illness or relationship breakdown rather than general financial mismanagement, this can be viewed more sympathetically.
Finding Specialist IVA Remortgage Lenders
The specialist lending market in the UK has grown significantly in recent years, and there are now a number of lenders who specifically cater to borrowers with IVAs and other forms of adverse credit. These lenders take a more nuanced view of applications than high street banks and are experienced in assessing the circumstances behind credit difficulties.
Specialist lenders typically differ from mainstream lenders in several important ways:
- Manual underwriting - Applications are assessed individually by experienced underwriters who consider the full picture rather than relying solely on credit scores
- Flexible criteria - They have specific policies for different types of adverse credit, including IVAs at various stages
- Tailored products - They offer mortgage products designed for borrowers rebuilding their credit, often with features that allow for improved rates as your situation improves
- Understanding of circumstances - They recognise that credit difficulties can arise from genuine life events and do not automatically view all adverse credit as evidence of irresponsibility
It is worth noting that most specialist lenders do not deal directly with the public. They distribute their products exclusively through mortgage brokers, which means working with an experienced broker is virtually essential if you want to access the full range of options available to you.
When looking for a broker, choose one who is authorised and regulated by the Financial Conduct Authority and who has demonstrable experience in helping clients with IVAs. Ask them how many IVA cases they have handled and what success rate they typically achieve. A good broker will be honest about your prospects and will not charge fees until they have a realistic expectation of securing an offer.
Be cautious of any company that guarantees approval regardless of your circumstances. No legitimate broker can guarantee a mortgage offer, and such claims should be treated as a warning sign. Reputable brokers will assess your situation thoroughly and give you an honest appraisal of your options before proceeding.
