Can you get a mortgage whilst in debt management? Or had a offer accepted and need a mortgage with debt management plan?
The answer is yes - It will depend on how this is reported on your credit report and your history of the payments to the debt management plan company. At view finance we have advisors that deal with these enquiries on a daily basis and are happy to help.
A Debt Management Plan (or DMP) is a solution to help you manage your debts and make them more affordable for you month to month. If you find yourself struggling to meet the repayments that you have previously agreed to, a DMP could be the right tool for you.
DMPs unfortunately are not suitable for everyone. You will have to create a budget for your general necessities e.g. food, transport, utilities, and if you can still afford to make debt repayments after that then you will mostly likely be able to qualify. It is highly important that you stick to your set budget as with a DMP you will struggle to obtain a good credit rating.
A lot of people think that they cannot get a mortgage whilst in debt management, this is not true however it will depend on several factors
All of the specialist brokers at View Finance have access to whole of market lending and don’t forget we specialise in these areas. If you have seen a mortgage advisor that sits back in their seat folding their arms, closes their note pad and start opening their office door for you to leave stating you won’t get a mortgage when in debt a Debt Management plan – well, this simply isn’t true.
Getting a mortgage with a Debt Management Plan
Whether you are currently in a Debt Management plan or recently finished one you may find it tricky to get a mortgage with your bank. A Debt Management plan is a payment arrangement often with a 3rd party company who manage and negotiate your debts on your behalf – you pay the Debt Management company and they pay your creditors (people you owe). When you make an arrangement to enter a Debt Management plan you will find that the debts on your credit report will probably fall into arrears (missed payments as you have not kept to the original contractual payment) normally after 8 missed payments the debts end up in default. It is import that the mortgage broker knows the debts that are in the debt management plan and when they defaulted (this will be shown on your credit file). The important thing once you have made an arrangement with a DMP company is that you stick to it and don not miss a payment (this show you have done something about your debts and intend to repay them).
Lenders that will consider applications whilst still in a Debt Management plan or a recently ended Debt management plan will ask for a statement showing you have maintained the payments over the previous 12 months and as long as you fit their other criteria its worth making an enquiry and getting an answer even if you have a low credit score as a result of this.
Lenders that use credit searching ignore your low credit score and regardless of whether it’s a score of zero or 999 will still look to lend as long as you meet their criteria. If your low score is due to missed payments, as long as this fits the lender criteria e.g. none in the last 3 months or none in the last 12 months depending which lender you approach, they will completely ignore the score.
Obtain a credit report
It is essential that our specialist mortgage advisors have access to your credit report. We need to see what any lender is going to see before approaching them to perform a credit search. Sometimes there are errors on a credit profile that will result in a decline from a lender. We would recommend using a website such as Check My File as they cross reference the 4 major credit agencies. This way the advisor can see why the score is low and work out which lenders may consider you.
What are my next steps?
Simple, once you have obtained a credit report make an enquiry. View Finance have specialist mortgage advisors who know the ins and outs of obtaining a mortgage with a Debt Management plan knowing which lenders to approach and more importantly which lenders not to approach. We will guide you through the application process and ensure that you have the best chance possible of obtaining the best mortgage for your individual circumstances.