Mortgages in Debt Management Plans

A Debt Management Plan (DMP) is an agreement between you and your creditors that helps you to manage your debts by allowing you to pay them off at a more affordable rate. Under a DMP, you will make regular payments to a licensed debt management company, which will divide the money between your creditors.

For many people contemplating a DMP to repay their debts, regaining control of their finances will be their top priority, not their credit rating. However, any accounts registered on your credit report and included in the DMP will be logged by the credit reference agencies, which means overcoming a poor credit rating will be the first obstacle to finding a mortgage.

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Having a bad credit rating does not mean you won’t be able to access a mortgage, but it will make finding one with competitive rates more difficult, which is where specialist debt management mortgage brokers can help.

Finding mortgages after Debt Management Plans

Once your Debt Management Plan ends, although adverse information will stay on your credit rating for up to six years, prospective lenders will be able to see that you took positive action to sort out your debts. As time passes, the old information will also be overshadowed by more recent positive payment actions. This will stand you in better stead with the lenders.

If you’re looking for a mortgage after a debt management plan, you should get saving. Quite simply, the bigger deposit you have, the less risky the deal will be for the lender and the interest charges will drop accordingly.

High street banks and building societies are risk averse and will probably be reluctant to lend to you; but all is not lost. Debt management mortgage brokers work with specialist lenders that offer mortgage products designed to meet your particular needs, so they should still be able to find you a competitive deal.

A remortgage to pay off a Debt Management Plan

Depending on your circumstances, remortgages can be the cheapest form of borrowing. If you’re considering using a remortgage to release equity in your property to pay off your debt management plan, there are a few things to seriously consider before you make a decision:

  • What will the new interest rate be?
  • How long will the mortgage last?
  • How much are the monthly repayments?
  • What type of mortgage is right for you?
  • How much will you have to pay in fees?
  • How will a remortgage improve your situation?

How can we help?

If you’re looking for a mortgage in Debt Management Plan, want to find a competitive mortgage after a Debt Management Plan, or are thinking about remortgaging to pay off a Debt Management Plan, our expert advisors can help.

We work with a leading network of debt management mortgage brokers who use their in-depth knowledge of the market to find you a great deal. For a free, no-obligation consultation, complete our enquiry form and one of our experienced debt management mortgage brokers will be in touch.

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