Getting a mortgage with a Debt Management Plan (DMP)
Can you get a mortgage with a Debt Management Plan? We outline all the ways we can help you look at getting a mortgage.
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A DMP is an informal agreement between you and your creditors for paying back your non-priority debts at a lower figure than was originally agreed. Non-priority debts are things like credit cards, loans and store cards.You pay back the debt by one set monthly payment, which is divided between your creditors.
It can be hard to get a mortgage if you have a debt management plan (DMP), but the good news is it's not impossible. Below we outline some more information.
Can I still get a mortgage with a DMP?
Yes, it is possible to get a mortgage if you have an active or completed Debt Management Plan (DMP). However, your options may be more limited compared to someone with a slightly better credit history.
But don't worry, there are lenders in the market who specialise in helping individuals who have faced credit challenges, so even if you've been turned away by high street banks or major lenders, you still have possibilities with specialist lenders.
Understanding your options
If you're currently in a DMP, your credit file might also show late payments or defaults, which can influence a lender's decision.
Most major lenders may be hesitant to consider your application under these circumstances. However, there are lenders who focus on providing mortgages to those with bad credit. These lenders will review your application, considering your individual circumstances and whether you can comfortably manage the monthly mortgage repayments.
Specialist lenders will be interested in understanding the reasons behind your debt, how well you've managed your DMP repayments and whether you've faced any other financial difficulties. This thorough review allows them to assess your current financial situation more accurately.
The importance of expert mortgage advice
When applying for a mortgage with a DMP, it's advisable to seek guidance from a specialist advisor such as Premier Mortgage Services. Our experts have extensive knowledge of the lenders who are more likely to accept your application, and they can help present your case in the best possible light. By working with a broker, you'll increase your chances of finding a mortgage that suits your needs.
If you're unsure about your options, contact us to explore how we can help you secure a mortgage despite your 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 remortgage 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.
Think carefully before securing other debts against your home. You may have to pay an early repayment charge to your existing lender if you remortgage.
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