Remortgage after an IVA

How lenders typically treat it

A general guide to how the market behaves, not a promise about any lender. Criteria change and every case is assessed individually. See the lender criteria database for named lenders.

Can you remortgage after an IVA has completed?

Yes. Completion changes your legal position entirely. While the arrangement ran, you could not take credit above £500 without your insolvency practitioner's consent; once the completion certificate is issued, that restriction ends, you are released from the debts in the arrangement, and you can apply for a mortgage like anyone else. What does not change on the day of completion is your credit file, and that is what shapes the answer.

Lenders see three things. The IVA entry itself, which stays for six years from the start date. The defaults that creditors recorded when the debts went into the arrangement, each with its own six year life. And your conduct since: whether the mortgage was paid on time throughout, whether any new credit has been managed well, and whether the file shows a stable recovery. Mainstream lenders tend to decline while the IVA is visible, or to want at least three years since completion. Adverse credit lenders grade the case by time since completion and by what has happened since.

The consolidation purpose adds its usual layer. Remortgaging to pay off debt means borrowing more than you owe and using the difference to clear cards and loans. Many lenders cap that at a lower loan to value than a like for like remortgage, and some are wary of a borrower building up unsecured debt again so soon after an insolvency arrangement. Expect to be asked what the new debt is for and why it arose. If the honest answer is that money is tight again, free advice from StepChange, MoneyHelper or Citizens Advice should come before an application, not after.

How long after an IVA can you remortgage?

Lenders count from two dates, and it helps to know which one each cares about. The first is the completion date on your certificate. The second is the date the IVA leaves your credit file, which is six years from the date the arrangement began, or the completion date if the arrangement ran longer than six years. For a five year IVA that completed on time, those dates are roughly a year apart.

• From completion. A small group of specialist lenders consider a consolidation remortgage straight away, typically at 70% loan to value or lower and at their highest adverse credit rate tiers. Equity and spotless conduct are essential.
• One to three years after completion. A wider group of adverse credit lenders, commonly up to 75% loan to value, with the rate tier improving as each anniversary passes.
• Three years or more after completion. Some mainstream lenders begin to consider the case, especially once the IVA is off the file, and pricing moves towards standard rates.
• Once the entry has gone. The IVA no longer shows on a credit search. Application forms may still ask whether you have ever been in an arrangement, and the answer must be truthful, but most lenders judge the case on the file as it stands.

Timing interacts with your current mortgage deal. If you are inside a fixed rate, an early repayment charge for leaving early can outweigh the benefit of moving a year sooner, so it is often sensible to line the remortgage up with the end of the deal and let the IVA age meanwhile. A broker can tell you which tier you would reach on either date.

What evidence will a lender ask for after an IVA?

More than a clean-credit applicant, but nothing unreasonable, and having it ready makes for a smoother application.

• Completion certificate. The document your insolvency practitioner issued when the final contribution was made. Every lender that considers a completed IVA will want it. If you have lost it, the practitioner can provide a copy.
• Credit reports from all three agencies. Lenders check that the defaults linked to the IVA are marked satisfied or partially satisfied, that their dates match the arrangement, and that nothing new has appeared since. Errors here are common and worth correcting first.
• Mortgage statements. Twelve to twenty-four months of statements showing every payment made on time, through and after the arrangement.
• An explanation. A short, factual account of what led to the IVA and what has changed. Redundancy or relationship breakdown followed by steady employment reads very differently from an unexplained slide.
• Details of the debts to be consolidated. Statements for each, and a clear reason for the borrowing. Many lenders pay creditors directly on completion.

Two points are worth stressing. Do not hide the IVA. Lenders search the Individual Insolvency Register and the credit file, and an undisclosed arrangement discovered later is a decline where a disclosed one might not have been. And keep the certificate permanently, because even after the entry has gone from your file a lender may ask about past arrangements.

What would a consolidation remortgage cost after an IVA?

More than a clean-credit remortgage while the IVA is on your file, because the rate tier reflects it and applies to your whole new mortgage, not only the debt being added. Any early repayment charge for leaving your current deal comes on top. The example below uses the fixed illustrative remortgage rate applied across this site and looks only at the £20,000 of debt being consolidated. A lender considering a recently completed IVA is likely to quote a higher rate.

The monthly outgoing on those debts falls from £532 to £136, but the £20,000 costs £32,748 over 20 years because it now runs alongside the mortgage for far longer than the cards and loan would have. At a post-IVA rate tier the monthly figure and the total are both higher, and the higher rate on your existing balance may cost more each month than the consolidation saves. A qualified adviser will set out the full picture, including whether waiting for a better tier or using a secured loan meanwhile would cost less overall. And the loan is secured on your home, so your home may be repossessed if you do not keep up the repayments.

Is a secured loan a sensible interim step after an IVA?

Often, yes. A secured loan, also called a homeowner loan or second charge mortgage, sits behind your existing mortgage rather than replacing it, and that suits the year or two after an IVA for three reasons.

First, the second charge market is more used to completed arrangements. Several specialist secured loan lenders consider a completed IVA from the certificate date, sometimes at a higher combined loan to value than a remortgage lender would allow, because adverse credit is the market they were built for. Our secured loans and IVAs page sets out what they look for. Second, your existing mortgage is left alone, so a competitive rate on the main balance is not swapped for a post-IVA rate, and no early repayment charge is triggered. Third, a secured loan paid on time for a year or two is exactly the kind of positive conduct that moves you into a better remortgage tier later, at which point the loan can be repaid from the remortgage; our guide to how a secured loan affects remortgaging later explains how that works.

The trade-off is cost. Secured loan rates are generally higher than remortgage rates, so on the same £20,000 the monthly payment and total are higher, and the loan has its own fees. Whether the interim step makes sense depends on how much your current mortgage rate is worth protecting, how long until the IVA leaves your file, and how urgent the consolidation is. Our secured loan versus remortgage comparison weighs the two, and an FCA authorised broker can put your own numbers to both. If neither works without stretching, free advice from MoneyHelper, StepChange or Citizens Advice comes first.

What improves your chances

• Keep the completion certificate safe, and obtain a copy from your practitioner now if you cannot find it.
• Check all three credit reports and make sure every default linked to the IVA shows as satisfied with the correct date.
• Pay the mortgage and every other commitment on time from the day the IVA ends; lenders weigh post-completion conduct heavily.
• Avoid building up new unsecured debt after completion, or be ready to explain clearly why it arose.
• Note the two dates that matter, completion and the six year mark, and plan around your deal's end date to avoid an early repayment charge.
• Use a broker who knows which lenders consider a completed IVA at each stage, rather than applying blind.

Alternatives worth considering

If a remortgage is not yet available, a secured loan from a specialist lender is the usual interim route; see secured loans and IVAs. If you are still inside the arrangement, our remortgage during an IVA page explains why consolidation is almost never possible until it completes. If your file carries other problems alongside the IVA, our remortgage with bad credit page takes the wider view. And if debt is building up again so soon after an arrangement, free advice from StepChange, MoneyHelper or Citizens Advice is the right first call.