Can I get an IVA if I have a mortgage?

11 May2021

An IVA (Individual Voluntary Arrangement) may be suitable for you if you cannot see yourself getting out of debt in any realistic timeframe. It works by setting up a legally binding agreement with your unsecured lenders, allowing you to make more manageable payments per month, and freezing interest on your unsecured debts.

How could it affect my mortgage?

IVA repayments are tailored to fit around your 'essential costs' such as your mortgage or rent, bills, petrol and food. This means that your debt repayments should not interfere with these costs. You should therefore be able to keep up with your mortgage during your IVA - although you'll have to keep making the payments yourself, as this won't be part of your IVA.

Unlike bankruptcy, an IVA will usually allow you to stay in your home. It is quite likely, however, that you will be expected to release some equity in your home during the final year of the IVA.

You can, therefore, get an IVA if you have a mortgage. Just be aware that your IVA will have an effect on your credit rating for six years (from the time it starts), which might make getting a remortgage more difficult - and can mean you have to pay a higher interest rate if you do.

Find out more about IVAs - click here.

Other things to think about

There are a few downsides to IVAs. For example, although your IVA should leave you with enough for your mortgage and other essential costs, you won't have much money left over to spend on 'luxuries'.

An IVA usually lasts five years (after which time any remaining unsecured debt included in the IVA will be written off, assuming your IVA has gone according to plan), which is longer than bankruptcy usually does. An IVA may still be preferable to bankruptcy, however, when you consider that bankruptcy might well require you to sell your home.

If you're not sure if an IVA is right for you, check out what other debt solutions are available by clicking here.

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Tags: IVA, Individual Voluntary Arrangement, debt, debt advice, unsecured debts, bankruptcy, quity, remortgage, mortgage

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