Can I get a mortgage while on a DMP?

eyhorne · 10 March 2018 at 3:04PM

Hi - my friend has just been put on a DMP but is struggling to pay her rent in a HA property (£700) - rental through private landlords in her area for similar properties is £900 so she would like to be able to buy a small place which would mean the mortgage would be much less a month.
Is there any chance at all that should could get a mortgage - she is in a steady job (11 years) and is paid monthly.
She was advised by the CAB that she should go part time as that would allow her access to more financial help - she is able to get food bags from Nourish weekly at present but not much else. She is a single mum with 16 years old - ex partner's debts have got her where she is now unfortunately.

ACG · 10 March 2018 at 3:12PM

It would depend on how everything appears on her credit report.
It is potentially possible, but it will not be at "normal" rates (circa 4%) and she would need probably a 15% deposit.

System · 10 March 2018 at 3:38PM

eyhorne wrote: »

Hi - my friend has just been put on a DMP but is struggling to pay her rent in a HA property (£700) - rental through private landlords in her area for similar properties is £900 so she would like to be able to buy a small place which would mean the mortgage would be much less a month.
Is there any chance at all that should could get a mortgage - she is in a steady job (11 years) and is paid monthly.

Not a chance. Even if she wasn't in a DMP and had excellent credit if she's struggling to pay rent on a HA property she would fail affordability tests. Also the mortgage isn't the only cost you have when you buy a house - the total cost of ownership of a house in the lower end of the market is usually around that of rent of council houses or housing association houses.

Also where would she magic up £20k or more for the deposit and fees? You're looking typically at at least a couple of grand just in fees.

ACG · 10 March 2018 at 5:53PM

Tarambor wrote: »

Not a chance. Even if she wasn't in a DMP and had excellent credit if she's struggling to pay rent on a HA property she would fail affordability tests. Also the mortgage isn't the only cost you have when you buy a house - the total cost of ownership of a house in the lower end of the market is usually around that of rent of council houses or housing association houses.

Also where would she magic up £20k or more for the deposit and fees? You're looking typically at at least a couple of grand just in fees.

I think you are looking at it too simplistically.

I used to rent, it cost me £750 a month.
I bought a house and the Mortgage was £350 a month - even if the rate had been around 7%, it would have been less than £750 a month.

It is now more often than not cheaper to own than it is to rent, that takes in to account keeping on top of things.

The deposit may be a gift from parents?

So rather than say it can not be done based on limited information it might be better to ask questions to help you give an answer or at least play devils advocate and give an answer that is not biased one way or the other.

...Just my thinking.

John-K_3 · 11 March 2018 at 8:29PM

Any bank ,ending to someone in this situation should be hauled over the coals by the regulator.

It is like 2008 never happened.

sourcrates · 11 March 2018 at 11:05PM

Mortgage lenders have tightened lending criteria in recent years, affordability is everything these days, the negative information due to her been on a DMP will go against her I am afraid.

She could try a broker, that would be her best bet to be accepted.

System · 12 March 2018 at 3:39AM

ACG wrote: »

I think you are looking at it too simplistically.

Really I'm not.

I used to rent, it cost me £750 a month.
I bought a house and the Mortgage was £350 a month - even if the rate had been around 7%, it would have been less than £750 a month.

And in my town I can rent a house for £2500 a month or rent one identical to mine for £500 a month which is just £70 more than my mortgage. A housing association house rental is at the lower end of the market, not much more than mortgage repayments on a cheap house. The OP even posted that the HA rent is £200, almost 25% lower than private rents.

It is now more often than not cheaper to own than it is to rent, that takes in to account keeping on top of things.

Not at the lower end of the rental market and when you factor in everything including the buying costs and all the things landlords pay for.

So rather than say it can not be done based on limited information it might be better to ask questions to help you give an answer or at least play devils advocate and give an answer that is not biased one way or the other.

They're on a DMP, they can't afford rent on a house that is almost 25% lower than the market average for a house in their area, they're not getting a mortgage, they will fail a mandatory affordability test. It isn't a biased answer, it is the truth.

Brock_and_Roll · 12 March 2018 at 10:23AM

John-K wrote: »

Any bank ,ending to someone in this situation should be hauled over the coals by the regulator.

It is like 2008 never happened.

Absolutely!

I would walk out of my employer if they lent in such circumstances, however, depressing the wall of cheap money and a decade of low interest rates means that brokers may be able to find someone to lend - does not make it a good idea though!

ACG · 12 March 2018 at 2:43PM

Tarambor wrote: »

they will fail a mandatory affordability test. It isn't a biased answer, it is the truth.

I must have missed the post that confirmed their income, expenditure and the Mortgage they want.

I would love to know how you know they will fail an affordability test. I do this sort of thing on a daily basis and with the only information to go off being that they are struggling to pay rent does in no way help me work out whether or not they will pass affordability.

The rent may be 25% lower than anything else out there, but it does not mean that a Mortgage would not be less again.
In terms of initial costs, aside from the deposit - those costs could be £0. Free val and legals are available.

You are making assumptions which does not help the OP.

You could be 100% spot on, but you could be far from the mark.

Unless you know their income, their expenditure and the size of the Mortgage they are after, the "truth" as you put it, is that you have absolutely no idea.

System · 12 March 2018 at 3:26PM

ACG wrote: »

I must have missed the post that confirmed their income, expenditure and the Mortgage they want.

I would love to know how you know they will fail an affordability test.

It is in the original post. They're struggling to pay housing association rent and they're in a DMP.

The rent may be 25% lower than anything else out there, but it does not mean that a Mortgage would not be less again.

It is irrelevant what the mortgage would be today, the affordability test is done with interest rates at 6-7%, not 2-3%. Housing association rents tend to be fairly in line with mortgage repayments.

Unless you know their income, their expenditure and the size of the Mortgage they are after, the "truth" as you put it, is that you have absolutely no idea.

They're in a DMP, they have no money saved up, they're struggling to pay their rent. If you think that they could get a mortgage then it would appear it is you who doesn't have a clue. Given you claim "to do this sort of thing on a daily basis" I can only come to the conclusion if you work for a broker, estate agent or financial institution you work for one of those scummy sub-prime lenders who don't give a toss.

John-K_3 · 12 March 2018 at 10:42PM

ACG wrote: »

I must have missed the post that confirmed their income, expenditure and the Mortgage they want.
.

It’s a virtual certainty, given the facts that they posted. Do you honestly believe, with the numbers given, that it was wrong to mak the very sensible conclusion that you seem so upset by?

Can I get a mortgage while on a DMP?

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