Mortgage with a Debt Plan (DMP)

Richard Crow talks us through Mortgages with a Debt Management Plan as part of our bad credit mortgages series.

What is a Debt Management Plan?

A Debt Management Plan is simply an agreement between an individual (debtor) and a company that is owed money by them (creditor). They address any struggles the debtor may have over the terms of an outstanding debt and renegotiate to something that is more manageable, along with freezing any interest at the same time.

Can I get a mortgage with a Debt Management Plan?

You certainly can, yes. It won’t be as straightforward as without, but it’s definitely possible, provided you’ve been in it long enough to suit the lender’s Debt Management criteria. Usually this is not so much of a problem after twelve months of successful payments. Some lenders have no restrictions and you just have to meet their criteria.

Do Debt Management Plans affect mortgages?

Yes, they affect the client’s ability to get a mortgage, as most high street lenders are not going to be interested in them. However, there are specialist lenders that specifically have products for clients that have had problems in the past. So all is not lost if you’re in a Debt Management Plan or you have been, you will just find it easier using a broker that has access to a range of lenders that will be happy to take you.

Why is it harder to get a mortgage with a Debt Management Plan?

It’s simply that you’re paying less to your creditors than originally stated in the agreement, which shows that you’ve got trouble sticking to agreements, naturally that’s going to make lenders wary.

What if I’ve made late payments on my Debt Management Plan?

Yes, in quite a big way. You will likely need a larger deposit, and even then it will be difficult to find a lender. It’s really important that you do your utmost to make your payments on a Debt Management Plan. Changing your original arrangement is one thing, but then not sticking to further arrangements will certainly harm your chances.

Does a Debt Management Plan show up on a credit check?

I won’t specifically show up as a Debt Management Plan, however, all your existing debt and creditors will show on there for six years and we will be able to see that you are in an arrangement to pay with your creditors.

How much can I borrow if I’m on a Debt Management Plan and what deposit will I need?

Four to four and a half times your disposable income, after your financial commitments and the cost of living.

In terms of the deposit, you’re going to need a higher deposit, but ultimately we need to see the entire case, see what’s available and then recommend.

Are there many lenders that lend with a Debt Management Plan?

Absolutely, we have access to between ninety and ninety-five different lenders, a good number of which specialise in providing mortgages designed for people that have had credit problems.

If you’ve been turned away by a high streak bank, don’t give up, give us a call. We can do our best to match you up with the best lender available to you.

Your property may be repossessed if you do not keep up repayments on your mortgage  or any other debt secured on it.