Mortgages with a Debt Management Plan
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What is a Debt Management Plan?
A Debt Management Plan is exactly how it sounds, it is a plan to pay off your debts in manageable monthly payments. There are charities out there such as StepChange and Debt Charity who will collect all the debts you owe and help get all your finances in check fee-free.
No matter whether your debts are credit cards missed payments or payday loans, you need to get them into check as soon as you can in order to improve your credit rating.
How much does a Debt Management Plan cost?
There are charities that do not charge to help you get your credit in order. People will work with you to come up with a budget that you can commit to in order to pay off your creditors. It is a good way to be able to gather your debts together and sort them out once and for all.
Will anyone lend to me if I am on a Debt Management Plan?
Firstly, you need to decide whether you can afford a mortgage, if you miss repayments on your mortgage your home could end up being repossessed. If you are already paying off debts to creditors it is unlikely that another creditor is going to take you under their wing.
There are specialist lenders who deal with those finding themselves in adverse credit, but you may need to seek expert mortgage advice from a mortgage broker to source these types of lenders.
Usually, Debt Management Plans allow you to pay off less than the minimum requirement in order to manage all of your debts at once. Paying debts off will eventually boost your credit score however having a Debt Management Plan can still affect your score.
It will be very difficult to find a mortgage lender who is willing to accept you onto a mortgage whilst you are still providing outgoings for previous debts you owe. You will be deemed a high-risk borrower and will be subject to higher interest rates if you do manage to find a lender willing to accept you onto a loan.
It can be worth waiting until you have paid off all of your debts before approaching a lender, the better your credit score, the better the mortgage rates tend to be.
Will a Debt Management Plan show on my credit file?
If you are making less than the contracted repayments to your creditors, then this will be recorded on your credit file as partial payments. It is important to keep up with your plan and
pay off your debts as you say you are going to, if you miss more payments you are going to see more adverse credit.
How do I improve my credit score if I am on a Debt Management Plan?
You should keep up with all of your outgoings whilst also keeping up with your Debt Management Plan to help improve your credit score. You need to ensure any unused accounts are closed and that you have registered the correct information on the Electoral Register.
You can opt to provide a larger deposit to make yourself more attractive when securing a mortgage. If you have outstanding debts that are being managed by a Debt Management Plan and can also provide a good-sized deposit then you will improve your chances of obtaining a bad credit mortgage.
How can a Mortgage Broker at Spot On Mortgages help me?
Here at Spot On Mortgages we are authorised and regulated by the Financial Conduct Authority meaning we can gain access to mortgage deals that you will not be able to find through high street lenders.
It can be scary when you apply for a mortgage knowing that you have a bad credit report to go alongside your mortgage application which is why the help of an expert mortgage broker will be very useful. We already have relationships with a range of different lenders. We know what it takes to have a strong application and will know if there is no chance of you getting a mortgage.
You may find it difficult to find a lender willing to accept you with adverse credit and a Debt Management Plan but there are some specialists who may be willing to accept you depending on your circumstances.
Here at Spot On Mortgages, we will listen to your situation and needs and then guide you to lenders who will be the right fit for you. It is important to keep in mind that with your adverse credit it can be a bit more challenging but here at Spot On we will be with you every step of the way and will do everything we can to help strengthen your application.
Spot On Mortgages Ltd are an Appointed Representative of TenetLime Limited, which is authorised and regulated by the Financial Conduct Authority. Contact our registered office today for an initial chat about how we can help you.
We’re registered in England & Wales and our Principal is authorised by the Financial Conduct Authority. Contact our registered office today for an initial chat about how we can help you.
A mortgage is a loan secured against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
Think carefully before securing other debts against your home
Why Spot On Mortgages to this?
Other types of mortgages are available such as Variable, Cashback, Capped, Collared & LIBOR.