Debt management plan mortgages from 4.69%

Can I get a mortgage if I have a debt management plan?

We have mortgage lenders who will consider applicants who have settled a debt management plan (DMP), and applicants who still have current debt management plans (DMP) in payment, and not yet cleared, or settled. Mortgage deals are available with highly competitive rates from 4.69%.

Expect to have a minimum deposit of 25%

The lender will require a reference from the DMP provider confirming:

  • The amount of debt outstanding
  • The date of the agreement
  • Details of all creditors including the lender name, account number, payment, and current balance
  • Confirmation that the last 12 months payments have been made on time

Sometimes it is not possible to obtain a reference. In these cases, if there is sufficient detail of the agreement, the mortgage lender can evidence what they need via bank statements.

If your debt management plan was satisfied over 36 months ago the DMP will not be a major complication to mortgage application, although you will still need a specialist lender.

If your debt management plan was satisfied within the last three years, or is currently active, you should be able to obtain mortgage lending if:

  • Your DPM has been active for at least 12 months
  • You intend to pay off your DPM in full when your new mortgage completes

What is a debt management plan?

Debt management plan is an agreement made with one or more of your creditors to pay off your debts. You usually enter into a debt management plan when you cannot afford to meet the standard terms of your debt. Under a debt management plan you pay your creditors a small amount each month towards clearing your debts.

Why is a debt management plan a problem with a mortgage application?

A debt management plan is an indication to potential lender that you have not been able to manage debt you have taken on. If that debt management plan is current it demonstrates that you are not managing your debt today. This therefore plays havoc with your credit file and your credit scoring.

Mainstream mortgage lenders are not interested in applications from those with a current debt management plan, or a DPM that has recently ended.

Sometimes a borrower will arrange a debt management plan with a number of creditors and this is often organised by commercial companies charging handle to this on behalf the borrower. The services of these companies are not necessary as you can arrange a debt management plan yourself or use a organisation set up as a charity and is fee free.

A debt management plan is a suitable if you have some surplus money available each month when you have met your main costs such as food, accommodation, and bills.

Often, after a period of time in a DPM, you may come to an arrangement with your creditors to settle the debts at a discount. This is good news for the creditors as they are not waiting around to get their money back, and good news for you as you do not need to settle the full amount of your debt.

Further information on bad credit mortgages

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