Getting a mortgage with a Debt Management Plan (DMP)

What do lenders look for when analysing your DMP?

When you apply for a mortgage, lenders will assess your financial situation by evaluating your income, expenses, and ability to afford the loan. They’ll also look at your credit history to see if you’ve had any major financial difficulties, such as court judgments (CCJs) or bankruptcy and how long ago these issues occurred. Minor issues like missed payments or past-due bills may be less concerning, depending on the lender.

The total amount of your debt and how you manage it will affect the amount you can borrow—especially if you're using a Debt Management Plan (DMP).

Can you remortgage with a Debt Management Plan?

Yes, it is possible to remortgage while on a Debt Management Plan (DMP), but there are several factors to keep in mind.

If you’re considering remortgaging to consolidate your debts and potentially pay off your DMP, this can be a viable option. However, it’s important to make sure you’re in a strong financial position before doing so. Ideally, you should have built up a significant amount of equity in your home, and it’s best to remortgage when your property’s value has increased since you first purchased it.

The remortage process with a DMP

The process of remortgaging is similar to applying for a mortgage for the first time. You’ll still need to pass affordability checks and the lender will consider the amount of debt included in your DMP. Keep in mind that even if you approach your current lender, there’s no guarantee they will approve your remortgage application.

For this reason, it can be beneficial to explore specialist lenders who are experienced in dealing with applicants who have a DMP. Talk to us today to understand your options.

Ready to get DMP mortgage advice?

Ready to get personalised advice? One of our qualified mortgage brokers will be happy to help.

We can identify the right lender for your situation and help you obtain the necessary documents for your application to be processed and offered. Please contact us here or call us on 0115 9499988.

What fees are associated with buying a property?

Valuation fee

When buying a property you want to know that the property is worth what you are paying for it, and if any repairs are needed, you can then make a decision on whether you want to proceed with the purchase and whether you want to reassess your offer to take into account any repairs needed.

Traditionally, lenders have instructed a surveyor to undertake a basic valuation, but this is now often replaced by a desktop valuation where information is gathered online on the likely value of the property. Whilst this may be acceptable to the lender, it does mean that nobody has been into the property to see and assess any particular issues. Both of these scenarios could leave you owning a property, which you may wish you had never bought, for example, structural issues or damp problems would not have been brought to your attention and you will have little chance of recovering any costs from anyone.

With some mortgages this valuation may cost you £200-£300, however in some instances it is provided free of charge. A more in depth survey is a Homebuyer or Level 2 Survey, this will cost from around £450 and will go into far more detail. This type of survey is suitable for most conventional or standard properties. For larger, more unusual properties or those in a state of disrepair there is a Full Structural or Level 3 Survey.

We would always recommend that first time buyers go for more than the basic valuation, it will help identify problems and can aid you in negotiating a lower price for the property.

Lender Arrangement fee

Some mortgages have arrangement fees and others don't. In many instances, these fees can be added to the advance, but it will mean that you are paying interest on a larger debt.

Whether it is worth paying a fee for a mortgage depends on the interest rates, the size of the mortgage and the size of the fee. Your mortgage advisor will be able to compare the deals and calculate which is the most economic route for you.

Broker fee

Your mortgage advisor may charge you a fee to undertake the research, make a recommendation and submit an application. Make sure you know what this figure is before committing to proceed.

Legal fees

You will need a solicitor or conveyancer to deal with the legal work involved in your purchase. If you would like a quote for this then please ask, as we have arrangements with a number of solicitors.

Stamp Duty

This is a tax paid when you purchase a property. Eligible first time buyers won't pay Stamp Duty on residential property purchases up to the value of £425,000. On purchases over this and up to £625,000 the tax is 5% of the amount over£425,000. Over £625,000 then normal Stamp Duty rates apply.