Mortgage with a debt management plan

About Martin Alexander

Martin has been a mortgage advisor for over 15 years. Start your mortgage enquiry by filling out our quick form or give us a call on 0800 195 0490. mortgage reviews

We’re constantly receiving enquiries regarding mortgages involving a debt management plan (DMP). 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, deposit and your credit score.

it is easier to get a mortgage after a DMP as opposed to a mortgage with a debt management plan. Nonetheless, both situations are possible especially if you know where to look!

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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 you’ve been involved with a DMP 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. The worst thing you can do is to try and chance your mortgage. 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. At expert mortgage advisor, our advisors have access to the whole market. Our advisors also work with specialist lenders who regularly approve mortgages involving debt management plans. We’ll carefully analyse your credit file and your current financial situation, before placing your application with the best suited lender.

What deposit will I need?

If you’ve had a DMP it’s still possible to secure a mortgage with as little as a 5% deposit. This would involve the help to buy scheme however. You would also need an otherwise 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%. As every situation is different, it’s always best to speak with an advisor to get a really accurate amount of your borrowing potential. As with all mortgages, the more you can deliver in terms of your deposit, will certainly help your application.

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

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

If you have 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?

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 even borrow up to 5x your annual income if you have a large deposit without having any severe credit issues.

As 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 outgoing according to their own criteria. As a result, going to the right lender will result in you possibly being able to borrow more.

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 furthermore. A self-employed mortgage with a DMP may 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 have an expert mortgage advisor on your side that knows 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 great rates in addition to your approval.

Things can get tricky if you’ve had further bad credit issues since your DMP settlement and it does narrow down the lenders that’ll be available to you. If you find yourself in this situation, you may have to part with a higher deposit and pay hefty fees to secure yourself 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 should be able to match lenders suited to your specific criteria, increasing your chances of approval. Our expert mortgage advisors have a wealth of knowledge in this field and can offer you fee free impartial advice.

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