The Intermediary –- May 2026 - Flipbook - Page 62
S E C O N D C H A RG E
Opinion
Rising IVAs
should be on every
broker’s radar
A
n individual
voluntary
arrangement (IVA)
should not be
treated as the end
of a conversation
when a potential customer asks for a
mortgage. For the right case, it can be
the start of a more practical one.
Individual voluntary arrangements
are not new, but they are becoming
harder for brokers to ignore as
their use is rising. So what exactly
is an IVA?
An IVA is a legally binding
agreement between a person and the
people they owe money to. It sets out
a payment plan based on what the
customer can afford, usually over five
or six years, and when it is completed,
remaining debts covered by the
arrangement can be wrien off.
For many customers, it is used
because they need structure,
protection from further creditor
action and a route out of debt without
having to sell their home.
That is important context,
because an IVA is oen a sign of
someone trying to deal with debt
in an organised way, not someone
ignoring it.
The latest Insolvency Service
figures show just how common these
arrangements have become. In March
2026, there were 12,252 individual
insolvencies registered in England
and Wales, including 7,075 IVAs. The
number of IVAs was 36% higher than
in March 2025 and 18% higher than
the 2025 monthly average.
Across 2025, 71,855 IVAs were
registered in England and Wales, up
from 67,089 in 2024, although still
below the high levels seen between
2019 and 2022. IVAs also made up 57%
of individual insolvencies in the 12
months to March 2026.
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The Intermediary | May 2026
It’s clear that these numbers
represent a growing group of
customers who may have jobs,
income and equity, but also a credit
history that does not fit mainstream
lending rules.
When the IVA ends
An IVA can sit on a client’s credit file
for six years from the date it begins.
During the arrangement, they also
need wrien consent from their
insolvency practitioner if they want to
take out more than £500 of credit.
That maers for mortgage and
second charge advice as some
customers will be near the end of an
IVA and some will have just completed
it. Others may need to sele the IVA
early because their circumstances have
changed and this is where cases can
get stuck.
A customer may be discharged
from an IVA and have a clear reason
for borrowing but still fail at the first
stage because the lender has a set rule
around time since discharge. That can
be frustrating for brokers and unfair
for clients whose position has clearly
improved, However, some lenders
take a different view, for example, we
do not set a minimum time from IVA
discharge in our criteria.
That does not mean every case
works. Affordability, conduct, loanto-value (LTV), purpose and the full
credit profile still maer. But it does
mean a broker does not have to wait
one, two or three years before starting
the conversation.
The second charge angle
Second charges can also play an
important role. A homeowner may
not want to disturb their first charge
mortgage. They may be on a rate that
would be costly to replace, or they may
face an early repayment charge (ERC).
DAVID BINNEY
is head of sales
at Norton Home Loans
In the right case, a second charge
can allow capital raising without
affecting the first charge. This is the
type of situation where second charges
should be part of the advice process
much earlier.
That capital could also be used to
sele an IVA, where it is suitable
for the client and where the IVA
supervisor agrees.
This is not a shortcut, and it
should never be treated as one.
Moving unsecured debt into secured
borrowing is a serious step. The home
may be at risk if payments are not kept
up, but where the case is sound it can
give the client a clear route forward. It
can help them sele the IVA, protect
their existing first charge mortgage
and begin to rebuild.
The key for brokers is to look
beyond the IVA. While an IVA tells us
something happened, it does not tell
us the whole story. Was it caused by
redundancy, divorce, illness, business
failure or a period of higher living
costs? Has the client kept to the terms
of the arrangement? Is their income
now stable? Is the borrowing reason
clear? Is the outcome beer than
leaving the client where they are?
Those details are important as
specialist lending is not about saying
yes to every difficult credit case. It is
about asking the right questions and
for lenders having criteria that allow a
case to be assessed properly.
As IVA numbers rise, brokers will
see more of these clients. Some will
not be right for secured borrowing,
some will need debt advice before
anything else and others will have a
clearer route forward. ●
