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AIBU?

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Original poster

To think I could get a mortgage...

28 replies

user1471481959 · 19/08/2021 22:23

After a horrible divorce I was left with no choice but to get an IVA. This was in 2018 have never missed a pay ment and I have two and a half years left to pay it.

However I am currently paying £800 rent and I would love to be able to buy. My parents are willing to lend me a 15% deposit. I haven't been brave enough to ring a mortgage advisor yet but realistically could I get accepted for a mortgage?

OP posts:
HilaryBriss · 19/08/2021 22:29

I don't think you will get one whilst you still have an active IVA. I am pretty sure that it will be against the T&C's to take out further credit as you are supposed to pay as much as you can afford towards your IVA.

There is lots of info if you Google.

Lockheart · 19/08/2021 22:31

It depends on lots of things. Your salary, house prices you're looking at, your outgoings and your IVA.

I'd just wait to speak to the mortgage advisor to be honest.

ohfook · 19/08/2021 22:32

I can't answer your question but I can tell you I've made a lot of mistakes with money in the past including being on a dmp. Our awesome mortgage broker still managed to get us a mortgage with only a 5% deposit.

A good broker is worth their weight in gold. They'll only get paid when you complete so they won't waste their time chasing deals you won't be eligible for. They'll know exactly how to package your application and who to approach.

Tilly18101 · 19/08/2021 22:37

You might but only with a broker and a good one that you’ll need to pay for.

You’d also likely have very high interest.

Northernsoullover · 19/08/2021 22:39

I remember meeting an IFA who specialises in obtaining mortgages for people on DMPs and IVAs. So they do exist. But yes, you will pay a higher interest.

Hekatestorch · 19/08/2021 22:43

Honestly, I would wait. A good broker probably could find you one. However, you could find the interest very high.

You might need to also check wether your parents lending you the 15% may count as a 'windfall'. I have no idea of it does.

But also, I though homeowners could be asked to remortgage or pay an extra year on an iva. So it could impact that as well.

Original poster
user1471481959 · 19/08/2021 22:44

It's very annoying as I have a very good income (combined my partner and I have an income of 80k) and where we live more than enough for a good house. I panicked because of my horrible ex left me in a really bad financial situation living in a room on my parents with my kids paying off 'our' debt. At the time the IVA was my only escape. I have a mortgage advisor ringing me next week so fingers crossed

OP posts:
SarahAndQuack · 19/08/2021 22:46

I'm not sure, but it would make a difference how much it was for.

My DP had a DMP for 25k which she paid off, never missed a payment, and we tried to get a mortgage in principle six months after she finished paying. Very, very few lenders were willing to consider us, and those who were, would only consider us because my credit score is perfect, because I was bringing in a second income, and because we had a very hefty deposit.

We got the furthest with L&C and I though they were really good - they gave us masses of advice, spent ages running through things.

Sorry I can't say something more hopeful. It's really grim.

SarahAndQuack · 19/08/2021 22:48

Oh, also: they will not like a loan of a deposit. A lot of places simply won't accept it unless it's a gift.

MulberrySquash · 19/08/2021 22:53

I had a terrible financial history and a mortgage broker found more than one deal for me, so best to get proper advice on it. Good luck!

knittingaddict · 19/08/2021 23:04

I agree with others that a loan from your parents for the deposit could be your real issue here. Mortgage lenders factor it into your affordability calculations and it could go against you. We helped our daughter, but it was very much a gift.

blablablafoghorn · 19/08/2021 23:10

You can definitely get one especially when they see your income and expenditures as long as you get a decent broker and have plenty if money coming in etc. My ex had recent defaults but for a mortgage with accord (who only brokers get access to) he is paying over £100 more than a high street mortgage but it's better than than throwing money after rent. In two years he can get a high street one so saves money. I would go after buying my own place every time even if you pay more it's still much cheaper than renting.

Widown · 19/08/2021 23:22

You probably need for it to be completely discharged then it’s no longer on your credit records. It gets discharged one year after you have paid it all off so if 2 and a half years left for payment, add one more year for it to be discharged

Widown · 19/08/2021 23:23

To the previous poster, defaults and IVAs are not the same thing

maddening · 19/08/2021 23:30

I think your iva supervisor would need to agree it, effectively if you have cash to buy a house why is it not paying your debts off (realise that your dps are lending you the cash), but it isn't just whether a bank will lend but whether you can do this within your IVA.

Original poster
user1471481959 · 20/08/2021 00:06

It's not that my parents are lending me the money for anything it's only for the deposit iyswim. They would gift it to me for
The deposit so that's why I can't use it to pay off some Iva.

OP posts:
SarahAndQuack · 20/08/2021 00:11

Is there a reason they wouldn't consider using it to pay off the IVA?

If they want to give it to you for a deposit, probably they need to sign a document saying it's a gift with no strings attached. But it would be odd to use money that's a gift to borrow more money, rather than to pay off a debt - and that's how mortgage lenders seem to see it.

When we went through all of this, it really surprised me how much difference time makes. It really might be very different in a couple of years when you've paid it all off, and maybe it'd be more useful to see if you could bring that date forward at all?

BBABaby · 20/08/2021 00:13

@user1471481959

It's not that my parents are lending me the money for anything it's only for the deposit iyswim. They would gift it to me for The deposit so that's why I can't use it to pay off some Iva.
But the IVA may not view it this way.

To them, you’d be receiving a cash gift which could mean it was available to pay your creditors.

I’d bide your time, honestly. Get the IVA done, then start thinking about mortgages.

jellybean88 · 20/08/2021 00:55

My brother is in a similar situation, he recently paid off his iva and now has a deposit to buy. He got advice from a broker who told him to wait a year and he would get better interest rates

BarbaraofSeville · 20/08/2021 06:06

Years ago I remortgaged to get out of an IVA and the interest rate was only 0.5-1% above what an applicant with a good credit history would pay.

However, that was pre 2007 so I don't know if those sorts of mortgages are still available, plus you have the issue with a gifted deposit - I was already a homeowner and was taking advantage of the value of my house doubling in little over 2 years so there was equity available to borrow that hadn't been there when I went into the IVA.

Have a look on Moneysavingexpert, there's information about mortgages and also a specialist IVA forum

forums.moneysavingexpert.com/categories/iva-dro

Hypnoshiding · 20/08/2021 07:07

I looked into an IVA a few years ago. One of the reasons I didn't take it up was the impact on mortgages. Most of which has already been covered.

Whilst your family may be loaning you the money for a deposit only, it's really muddying the waters. They may not accept you have access to money for a house but not to pay things off.

A remortgage with an IVA is a different matter, because you are remortgaging so you can stop paying the monthly amount.

Unfortunately mortgage applications don't take into account, that if you can afford £800pm in rent, that you can afford a £600pm in mortgage payments.

Its worth looking into. But I think its going to cause more issues and you would be best waiting until its done and them at least a year after.

It was also explained to me that as the debt will show as you didn't pay them in full, and iva has a bigger impact than using a DMP and paying in full.

One other thing to think about (and I was told this years ago by a broker so not sure how accurate it is or if its still true) that if you get a mortgage for people with bad credit, it can make remortgaging down the line harder. As its a signal to the new mortgage lenders that you have a history of bad credit, even if it's not showing on your report anymore.

Original poster
user1471481959 · 20/08/2021 10:21

Thanks for all the advice it's been very helpful

OP posts:
welshladywhois40 · 20/08/2021 14:31

Slightly different view but if you can find a mortgage with higher interest in the long term it will better then paying rent and that is 2 years payments completed and then you look to remortgage.

First step is talk to a broker. I used Liam at LT mortgages. I had credit concerns and he was very helpful.

IceLace100 · 20/08/2021 14:38

@user1471481959

It's very annoying as I have a very good income (combined my partner and I have an income of 80k) and where we live more than enough for a good house. I panicked because of my horrible ex left me in a really bad financial situation living in a room on my parents with my kids paying off 'our' debt. At the time the IVA was my only escape. I have a mortgage advisor ringing me next week so fingers crossed
Could you overpay the IVA to get it out of the way with your pare cash?

I know that things last on your credit record for 6 years, so the sooner it's paid the better.

Skysblue · 20/08/2021 14:44

Why are tou asking internet randoms when a mortgage advised will tell your an accurate answer in minutes?

Anyway my guess is probably ok if parents stand as guarantors and have sufficient equity - but that is just a guess from an internet random go ask an expert.