Get Approval for the Best IVA Mortgage: Successfully Applying for a Mortgage with an IVA

The following is a guest post from Houston, Texas real estate developer and entrepreneur Tracy Suttles.

An Individual Voluntary Arrangement (IVA) is a way of eliminating unsecured debt over a five year period. An IVA mortgage is a specialist bad credit mortgage loan. Defaulting on credit agreements will mean that the cost of borrowing will be more expensive. This may mean that an existing variable rate mortgage is more affordable, but this can be accurately assessed through the services of a bad credit mortgage broker.

Why Apply for an IVA Mortgage?

  • There is a clause in the agreement that states that the insolvent will need to apply for a mortgage with an IVA at the end of year four. Subject to affordability, it is necessary to raise up to 75% of all available home equity to contribute to the Individual Voluntary Arrangement.
  • Once released from the agreement, a bad credit home mortgage loan could help to reduce home mortgage payments. The likelihood of this increases several years after being discharged.
  • An IVA mortgage can help to raise equity for a foreign holiday, home improvements or a new car.

A Minimum of 75% Home Equity

Although getting a mortgage with an IVA is more difficult, it is a lot easier if the applicant has sufficient home equity. Most Insolvency Practitioners expect their client to get a loan for up to 75% of the available equity because this is the maximum amount that most banks will lend. This figure was established because it protects lender interest in the event of repossession or negative equity.

Affordable IVA Mortgage Payments

The new bad credit mortgage loan must not affect the applicant’s ability to pay their Individual Voluntary Arrangement (IVA). If a year 4 mortgage with an IVA will make repayments more difficult for the insolvent, the Insolvency Practitioner (IP) – subject to approval – may be prepared to reduce the amount of equity that needs to be raised. Affordability is fundamental the individual’s future ability to remain solvent.

Credit Score Rating

Whilst someone who is in an Individual Voluntary Arrangement (IVA) won’t have a good credit score, it is important to check the credit report for errors and get any issues corrected. Don’t make too many applications for credit as each search will show for a period of not less than 12 months. Also, be sure to register on the electoral roll as this will almost always lead to a decline.

An IVA mortgage could be fundamentally important to the Individual Voluntary Arrangement (IVA). It can also help to reduce home mortgage payments several years after being discharged because credit score ratings will start to improve over time. It is worthwhile consulting a bad credit mortgage broker because they are better placed to identify the most competitive deal.

Families can Help with Home Ownership: Monetary Gifts, Guarantees or Joint Borrowings can be Beneficial

The following post is a guest post from Houston, Texas area real estate developer and entrepreneur Tracy Suttles. Tracy can be best contacted for questions, comments and concerns on Twitter at @tracydsuttles.

Often living on a single income and paying day-to-day expenses such as rent, school fees and medical costs leave a family’s disposable income significantly lower than is desired. Therefore, it can be very difficult for families to save the funds required for a deposit to buy a home of their own.

Caring relatives can provide the necessary support for family members looking for ways to invest in a property.

Family Assistance Can be in Many Different Ways

Monetary Gift- Relatives always spend money on gifts at various times of the year such as birthdays, anniversaries, Christmas and Easter. These can add up to a substantial amount of money over a few years. So if they wish to help the family, they could make a ‘one-off’ monetary gift to cover all presents for all members of the family, for a chosen number of years.

Family Guarantee- A parent or a sibling could simply ‘guarantee’ the loan. This process does not involve the guarantor making a monetary contribution. However, it is important to seek legal advice prior to undertaking this course of action.

Co-Applicants- A family member, relative or even a close friend can be a part-owner of the property as well as a joint-borrower. This process is a little more complicated because it involves working out future financial commitments.

  • Who is responsible for the standard outgoings such as rates?
  • Is there a payment from the person occupying the house to the person who is not resident in the property?
  • How is the maintenance costs shared?
  • What happens if one person wants to sell the property?

What are the Complications of a Guarantee or Co-Borrowing?

It is all very well to be altruistic and wish to help family members. However, care should be taken to put safeguards in place to protect the finances of the people involved and, more importantly, the relationship.

There is nothing more soul destroying than family members falling out over financial matters. It can have far reaching effects with other family members taking sides according to who they think is right or wrong. A simple precaution would be to establish a formal written agreement which sets out each person’s rights, commitments and liabilities.

Advantages of Property Ownership

  • Paying rent does not help in the process of wealth creation. However, paying a mortgage will eventually lead to property ownership and capital gains.
  • Living in an own home is more stable. A landlord can always give notice to vacate a rental property.
  • An owner-occupied home can be styled to suit the personality of the people living in the home and will give the people a sense of pride and individuality.

Relatives who can assist family members to take that first step towards home ownership will be making a very useful contribution. The decision as to the type of assistance will depend on the individual circumstances.

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