Mortgage with a debt management plan (DMP) can help you get control of your debt, it can also impact your chances of getting a mortgage. It would be incorrect for many borrowers to believe that a mortgage with a DMP is impossible. Regardless of whether your DMP is active or complete, you can still apply for a mortgage.
In contrast to an active DMP, obtaining a mortgage is simpler with a completed DMP. However, both scenarios are conceivable, especially when approached correctly. Lenders will also evaluate your credit score, income, LTV, and affordability.
This article will examine your options for obtaining a mortgage despite having a DMP. It makes sense that you could think your alternatives are somewhat constrained. Not to worry, we can assist. Our consultants are experts in mortgages involving debt management strategies. If you need an advisor’s assistance, you can inquire.
I have a debt management plan. Can I still get a mortgage?
Obtaining a mortgage will not be simple if you have a DMP, but it is still doable.
Many lenders will just reject you if your DMP was active within the last six years. Additionally, brokers could misinform you that you won’t qualify for a mortgage. This may be due to the fact that they are limited to a particular panel or lack expertise in situations involving debt problems.
You will probably require a specialised lender if you need a mortgage with a DMP. A consultant with unrestricted access to the entire market will also be advantageous to you. Advisors with knowledge in debt-related matters can also be quite helpful.
Don’t go up to a lender by yourself because you’ll just be taking a gamble. One of the worst things you could possibly do is this. This is because being rejected could result in more problems with your credit report.
Our consultants deal with specialised lenders and have access to the whole market. High-street lenders are likely to reject a mortgage containing a DMP, but specialist lenders are more likely to approve it. Consult with our specialists to determine the appropriate lender for your needs after evaluating your scenario.
A debt management strategy is what?
For people who desire to repay their debt in a more controlled manner, a debt management plan is created. For instance, a DMP enables persons who are in debt to pay back their creditors at a lower rate.
If you believe your debt is getting out of hand, a DMP may be the best option to help you regain control of your finances. Typically, a DMP practitioner is required to organise and approve your strategy. Then, your practitioner will function as a go-between for you and your creditors.
If I have a DMP, how much of a deposit will I need?
Higher deposits always allow access to more lenders and perhaps better rates, as is the case with all mortgages. Having said that, it is still feasible to obtain a mortgage with a 5% deposit if you had a DMP.
However, doing so would require submitting a Help to Buy mortgage application. Most of the time, you would also need to have had a spotless credit history for the previous three years. If you’ve had prior credit problems like CCJs or defaults, you might need a larger deposit of 15-20%.
It is highly recommended that you examine your credit report before applying for a mortgage. You’ll have a better understanding of what lenders will find on your credit record thanks to this. Then, you can adjust your strategy accordingly.
If my credit is so low, can I still get a mortgage?
Usually, a financial battle is followed by the creation of a debt management plan. As a result, it’s typical for borrowers to experience further credit problems.
Along with your DMP, it is feasible to obtain a mortgage despite the following credit issues:
- CCJs Defaults
- Untimely payments
- Bankruptcy IVAs Repossession
Having a DMP in addition to other credit concerns can limit your alternatives, even though there are specialised lenders who concentrate on bad credit. Your alternatives are further constrained if your credit problems are serious.
Without analysing your mortgage demands and credit history, it is impossible to provide you with a personalised response. The good news is that you can consult a knowledgeable mortgage advisor for more information.
If I’ve had a DMP, how much money may I borrow?
Generally speaking, if you have a DMP, your borrowing capacity can be capped at four times your annual income. If you have a sizable down payment and no major credit problems, you may be able to borrow up to five times your annual salary in some cases.
Lenders will evaluate your affordability if you have an active DMP by counting the DMP as a monthly expense. The key point to remember is that lenders will evaluate your DMP as an expense based on their own standards. Because of this, finding the ideal lender can help you borrow as much money as possible. This is so that lenders can evaluate expenditure using their own special grading methodology.
Lenders will evaluate your income as well. If you’re self-employed, this is especially crucial as going to high street lenders may leave you with little options.
It is highly likely that a specialised lender will be needed for a self-employed mortgage with a DMP. This is because, even if you’ve just been self-employed for a year, specialised lenders frequently provide greater flexibility. It is therefore recommended to work with an expert who is familiar with lenders and their particular requirements.
Mortgage application with a completed DMP
Your prospects of getting a mortgage can be improved if your DMP has been settled as opposed to being active. You should have more lender options if your DMP was resolved a lot of years ago. With an older DMP, obtaining a mortgage is undoubtedly simpler than with a more recent one.
The good news keeps coming after that. The main benefit of having settled your DMP is that it might aid in the evaluation of your ability to pay. This is due to the fact that your DMP has no monthly expenses, which raises your capacity to borrow.
If your DMP was completed more than three years ago, you may find that qualified lenders will also approve you while also giving you favourable rates.
Since finishing my DMP, my credit issues have gotten worse.
If, after finishing your DMP, you encounter fresh credit problems, things could get challenging. Additional credit issues may restrict the kind of lenders you can approach.
If this is the case, getting a mortgage can require you to pay more up front and incur additional costs.
Mortgage with a debt management plan, speak to a DMP expert
We highly recommend meeting with a specialist advisor who has access to the entire market if you’ve had a DMP and need a mortgage.
Specialist advisors help find lenders that fit your particular requirements and increase your chances of being approved. Our consultants are aware of debt relief options and can provide you with unbiased guidance.