Mortgage with a debt management plan

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Martin has been a mortgage advisor for over 15 years. Check to see if you qualify by filling out our quick form or give us a call on 0800 195 0490. mortgage reviews

It’s certainly possible to get a mortgage with a debt management plan, whether the DMP is active or complete. The main things lenders will consider before approval are the general qualifying criteria. These are assessments of your affordability, income, LTV and your credit score.

it is easier to get a mortgage with a completed DMP in comparison to a mortgage with an active DMP. Nonetheless, both situations are possible, especially with the right approach. Our advisors specialise in mortgages that involve debt management plans. You can make an enquiry below if you’re ready to get started.

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I need a mortgage with a DMP, what should I do?

If you’ve been involved with a DMP, then getting a mortgage may not be a straightforward process. If your DMP has been active in the last six years, a lot of lenders will simply decline you. Brokers may also tell you that you won’t be able to get a mortgage, as most are restricted to a certain panel.

If you need a mortgage with a debt management plan, you’ll most likely need a specialist lender. You’ll also benefit from an advisor with access to the whole market and not just tied to one panel. Furthermore, advisors that have experience and specialise in adverse credit can be invaluable.

Don’t approach a lender by yourself, as you’ll simply be leaving it to chance. This is perhaps one of the worst things you can do. This is because being declined can cause further detriment to your credit file.

It’s understandable that you may feel as though your options are really limited and finding a mortgage can really feel like a needle in a haystack! Don’t worry, we can help.

Our advisors have access to the whole market and work with specialist lenders. Specialist lenders are more likely to approve mortgages involving debt management plans whereas highstreet lenders are likely to decline. Speak to our specialists who will assess your situation and if possible, place your application with the best-suited lender.

How much deposit will I need?

As with all mortgages, higher deposits always give access to more lenders. That said, If you’ve had a DMP it’s still possible to secure a mortgage with as little as a 5% deposit. This would however involve the help to buy scheme. In most cases, you would also need a clean credit file for at least the last three years.

If you’ve experienced other credit issues such as CCJs or defaults, then you may need a higher deposit of around 15-20%. It’s highly advised to check your credit file before making a mortgage application. This will give you an idea of what lenders will see on your credit report. You can then tailor your approach accordingly.

As every situation is different, it’s always best to speak with an advisor. You’ll then receive advice tailored to your circumstances.

I have really bad credit, can I still get a mortgage?

A debt management plan usually follows some sort of financial struggle. As a result, it’s common for borrowers to have other credit issues. These may involve CCJs, defaults and late payments for example. Although there are specialist lenders who focus on adverse credit, having a DMP in addition to other credit issues can restrict your options.

If you’ve had severe bad credit issues such as a bankruptcy, IVAs or a repossession, then your options become further limited. It’s impossible to give you a tailored answer without assessing your mortgage needs and credit file. The good news is you can speak to an expert mortgage advisor for further clarification.

How much can I borrow if I’ve had a DMP?

As a rule of thumb, if you have a DMP you may be limited to borrow 4x your annual income. It’s sometimes possible to borrow up to 5x your annual income if you have a large deposit without having any severe credit issues.

If you have a DMP, lenders will assess your affordability by taking the DMP into consideration as a monthly outgoing. The important note here is that lenders will assess your DMP as an expenditure according to their own criteria. For this reason, approaching the right lender can result in borrowing the maximum amount. This is because lenders don’t assess expenditure in the same way.

Lenders will also assess your income. This is particularly important if you’re self-employed as going to high street lenders can drastically impact your options. A self-employed mortgage with a DMP will more than likely require a specialist lender. This is because specialist lenders tend to offer more flexibility even if you’ve only been self-employed for one year. This is why it’s paramount to use a specialist that understands lenders and their specific criteria.

Getting a mortgage with a settled DMP

Having a settled DMP as opposed to an active DMP can be advantageous when applying for a mortgage. If your DMP was settled a number of years ago, it’s certainly easier to get a mortgage than if you’ve only just settled your DMP.

The main advantage of having settled your DMP is for when lenders assess your affordability. This is because there are no monthly outgoings for your DMP, increasing your borrowing power. If your DMP was settled over three years ago, you’ll find that suited lenders may even offer you preferential rates in addition to your approval.

Things can get tricky if you’ve had further bad credit issues since your DMP settlement. Additional credit problems can limit the lenders that you’ll be able to approach. If you find yourself in this situation, you may have to part with a higher deposit and pay large fees to secure a mortgage.

Can I get a mortgage with a DMP?

If you’ve had a DMP and require a mortgage, we’d highly recommend speaking to a specialist advisor who has access to the whole market.

Specialist advisors can match lenders suited to your specific criteria, increasing your chances of approval. Our advisors have a wealth of knowledge in this field and can offer you impartial advice.

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