Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • MBFF
    • By MBFF 6th Oct 17, 11:59 AM
    • 12Posts
    • 0Thanks
    MBFF
    Advice needed for mortgage after DMP
    • #1
    • 6th Oct 17, 11:59 AM
    Advice needed for mortgage after DMP 6th Oct 17 at 11:59 AM
    Hi, looking for some advice as its been over 10 years since we looked at mortgages.

    In 2012 we entered a DMP due to redundancy and defaulted on everything we owed, 3 credit cards (4k, 2k, 1k) a large loan (20k+) and our overdraft (1k) In total around 28k. We have kept payments up with Stepchange and increased payments to bring our original end date from 2020 to March next year which coincides with all of our defaults being 6 years old.

    We are in a substantially better position now and pay Stepchange 400 a month and have just over 2k left to pay on it. The DMP has helped us live within our means and we have a healthier relationship with money than we had 6+ years ago. We now have 2 children of primary school age.

    We have never missed payments on our mortgage or any other bills other than when we defaulted on the credit.

    We are looking at moving house around the middle of next year, will our previous situation affect us? We would be completely honest and go through a broker but are wondering whether even though the defaults would no longer show on file if we would have trouble borrowing.

    We have around 60k equity in our house and have a few thousand in savings for an emergency fund. We have salaries of 40k and 18k with 3k in bonuses every year (guaranteed)

    We have no other credit other than the defaulted ones, we are both on the electoral roll, with stable jobs of over 3 years, our credit file shows mobile bills and a Very account which are always kept up to date and under 20% utilised, we have no overdraft on our current account and it always has money available. We had car finance 3 years ago which was paid in full and shows as such. I check all 3 credit reports religiously each month and they are accurate. The only question mark around our reports is we took out a Northern Rock Together mortgage for 100% 12 years ago for our current home and the loan element obviously appears as a separate entry (this wasn't included in the DMP and has been paid in a single payment with the mortgage each month), would this count against us or is it worthwhile adding a note to the file as this would be cleared at the same time as we moved and cleared the mortgage.

    We currently pay 620 a month with Landmark (who took over the NR mortgage) and 400 to Stepchange so both of these would be free for any other mortgage payment if we were able to get one. We have very average outgoings as we budget to ensure we never get in the same position we were in. I have no idea on what our affordability for a mortgage would be, we have been looking at homes in the region of 280-300k, is this realistic?

    Thanks in advance
Page 1
    • MBFF
    • By MBFF 7th Oct 17, 12:52 PM
    • 12 Posts
    • 0 Thanks
    MBFF
    • #2
    • 7th Oct 17, 12:52 PM
    • #2
    • 7th Oct 17, 12:52 PM
    Anyone able to offer any advice?
    • glentoran99
    • By glentoran99 7th Oct 17, 12:56 PM
    • 4,932 Posts
    • 3,936 Thanks
    glentoran99
    • #3
    • 7th Oct 17, 12:56 PM
    • #3
    • 7th Oct 17, 12:56 PM
    I entered a DMP in 2011, paid it off a couple of years ago, was able to get a mortgage last October, the underwriters wanted an explanation of how I ended up in debt etc


    It would be worthwhile as soon as you can getting a credit card and repaying in full each month
    • PKaurK
    • By PKaurK 7th Oct 17, 4:32 PM
    • 52 Posts
    • 36 Thanks
    PKaurK
    • #4
    • 7th Oct 17, 4:32 PM
    • #4
    • 7th Oct 17, 4:32 PM
    If you're currently still paying the DMP, I think you'll struggle to get a mortgage to be honest. I think it's worth you speaking to a broker, they may be able to find a lender who will consider a mortgage.
    • YHM
    • By YHM 7th Oct 17, 5:08 PM
    • 303 Posts
    • 98 Thanks
    YHM
    • #5
    • 7th Oct 17, 5:08 PM
    • #5
    • 7th Oct 17, 5:08 PM
    Hi MBFF

    There are lenders out there that would consider you for a mortgage even with an active DMP, however, they would generally restrict the loan to valuation they would provide to you, so you may need a larger deposit then you are considering or you may need to reduce the property valuation.

    You need to speak to a Mortgage Broker who will consider the lenders available to them, as to what options you have.
    I am a Mortgage Broker.

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice
    • glentoran99
    • By glentoran99 7th Oct 17, 5:16 PM
    • 4,932 Posts
    • 3,936 Thanks
    glentoran99
    • #6
    • 7th Oct 17, 5:16 PM
    • #6
    • 7th Oct 17, 5:16 PM
    If you're currently still paying the DMP, I think you'll struggle to get a mortgage to be honest. I think it's worth you speaking to a broker, they may be able to find a lender who will consider a mortgage.
    Originally posted by My side hustle
    Hi MBFF

    There are lenders out there that would consider you for a mortgage even with an active DMP, however, they would generally restrict the loan to valuation they would provide to you, so you may need a larger deposit then you are considering or you may need to reduce the property valuation.

    You need to speak to a Mortgage Broker who will consider the lenders available to them, as to what options you have.
    Originally posted by YHM


    The OP will have it paid off in 5 months, although with a few thousand in savings I would wonder why they don't get it paid off now
    • MBFF
    • By MBFF 7th Oct 17, 6:43 PM
    • 12 Posts
    • 0 Thanks
    MBFF
    • #7
    • 7th Oct 17, 6:43 PM
    • #7
    • 7th Oct 17, 6:43 PM
    Because I would rather have a months salary sat in savings in the event of an emergency that I could use without crippling us. I've already brought my end date of the DMP down by 2 years. The savings have stayed at 2.5k for about a year, our DMP includes a budget set aside for an emergency fund.

    Anyway, thanks for the advice. I'm not interested in a mortgage whilst still in the DMP more looking for whether it would be an issue getting one after it's cleared and the defaults drop off. Plus whether the house value we are looking at are realistic?

    Thanks
    • MBFF
    • By MBFF 7th Oct 17, 6:49 PM
    • 12 Posts
    • 0 Thanks
    MBFF
    • #8
    • 7th Oct 17, 6:49 PM
    • #8
    • 7th Oct 17, 6:49 PM
    Because I would rather have a months salary sat in savings in the event of an emergency that I could use without crippling us. I've already brought my end date of the DMP down by 2 years. The savings have stayed at 2.5k for about a year, our DMP includes a budget set aside for an emergency fund.

    Anyway, thanks for the advice. I'm not interested in a mortgage whilst still in the DMP more looking for whether it would be an issue getting one after it's cleared and the defaults drop off. Plus whether the house value we are looking at are realistic?

    Thanks
    • YHM
    • By YHM 7th Oct 17, 7:00 PM
    • 303 Posts
    • 98 Thanks
    YHM
    • #9
    • 7th Oct 17, 7:00 PM
    • #9
    • 7th Oct 17, 7:00 PM
    I think the emergency fund is a fantastic idea and would recommend retaining that no matter what, especially as you have handled the DMP so well.

    Likewise as my previous post, there will be lenders that will consider you once your DMP has been cleared, however, these won't be mainstream high street lenders.

    With a deposit of 50 - 60k and a joint income of 58k, I would personally bring your expectations down slightly to around the 250k purchase price, to allow for a mortgage of 200k and associated purchase cost (SDLT etc). This would allow for the increased interest rate you would most probably face post DMP.
    I am a Mortgage Broker.

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice
    • MBFF
    • By MBFF 7th Oct 17, 7:32 PM
    • 12 Posts
    • 0 Thanks
    MBFF
    Ok thanks. How would DMP affect us overall? If it's cleared and all defaults are clear from our reports why would our rate be higher? Would a lender be able to tell we had previously had a DMP in place?

    I was under the impression all our reports would show is our mobile bills, very account and settled car insurance? Would it show all our current debts as satisfied as I thought they disappeared 6 years after the default date
    • YHM
    • By YHM 7th Oct 17, 8:17 PM
    • 303 Posts
    • 98 Thanks
    YHM
    It would be clear and in flashing lights for anyone doing a credit search on you.

    The rate would be higher as the lenders that open that doors to people who have been through / recently completed DMPs are few and far between, so they can charge a little bit more. Call it profiteering if you want, they would call it 'pricing appropriate to risk'

    Have you run a credit report of your own? Its not just about your active credit accounts, as your previous ones will still show.
    I am a Mortgage Broker.

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice
    • MBFF
    • By MBFF 7th Oct 17, 8:29 PM
    • 12 Posts
    • 0 Thanks
    MBFF
    Could you explain how it would be clear? I was under the impression that after 6 years the debt no longer shows on the account. I have 1 debt in my closed accounts which is old car finance that shows as settled in 2013.

    None of my previous loans or credit cards show and these were all settled pre 2011.

    I check all 3 credit reports every month. I get that the rate would be higher for those just out of a DMP where the report shows old defaults, but am I wrong in thinking that there would be no trace of any poor credit history 6 years after the date of default?

    I'm not attempting to deceive lenders by hiding my past problems as I would use a broker so would expect them to steer clear of those I've defaulted with, albeit 6+ years previously
    • YHM
    • By YHM 7th Oct 17, 8:48 PM
    • 303 Posts
    • 98 Thanks
    YHM
    Sorry, just revisited the dates on your initial post.

    Generally DMP accounts have a DMP marker on, but if they are defaults from 2012, then in theory they should come off in 2018.
    I am a Mortgage Broker.

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice
    • MBFF
    • By MBFF 7th Oct 17, 8:55 PM
    • 12 Posts
    • 0 Thanks
    MBFF
    Thanks,

    So in terms of applying for a mortgage, as we are looking at June/July and hopefully being in a position to go to a broker would high street lenders be viable and are we being realistic looking at 250k mortgages? The affordability calculator I completed on Nationwide (who I bank with) said the maximum lend amount is 290k, the information entered was completely accurate except for missing out what we currently owe as by the time we are looking at applying these debts would be cleared through the DMP.

    Thank you for your help
    • YHM
    • By YHM 7th Oct 17, 9:06 PM
    • 303 Posts
    • 98 Thanks
    YHM
    You could try, but the figures I mentioned before would be more realistic.

    Nationwide would need you to be DMP clear for 3 years at the point of application.
    I am a Mortgage Broker.

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice
    • MBFF
    • By MBFF 7th Oct 17, 9:19 PM
    • 12 Posts
    • 0 Thanks
    MBFF
    Why 3 years? That's tarring me with the same brush a sa discharged bankrupt isn't it? Plus, how would they be able to tell I had been in a DMP?
    • YHM
    • By YHM 7th Oct 17, 9:24 PM
    • 303 Posts
    • 98 Thanks
    YHM
    I'm just giving guidance on respective lending criteria. If that is how they assess a DMP, then that is their call.

    It would be down to your broker to find a lender that wouldn't just tar you with any brushes. However, your broker will have a responsibility to disclose material facts and if the question is asked by a lender then it needs to be put in the application pack. I can't recall right now if Nationwide do ask specifically about a DMP or if they ask a wider generic question. I am just giving off the research tool I have access to in regards to DMP options.
    I am a Mortgage Broker.

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice
    • csgohan4
    • By csgohan4 7th Oct 17, 9:31 PM
    • 4,015 Posts
    • 2,497 Thanks
    csgohan4
    Why 3 years? That's tarring me with the same brush a sa discharged bankrupt isn't it? Plus, how would they be able to tell I had been in a DMP?
    Originally posted by MBFF


    Because your meant to disclose, anything other is mortgage fraud and it is based on trust and honesty isn't?


    You are higher risk than someone without a DMP and adverse credit and therefore you will pay more in interest.


    Get a broker to get your own individualised options
    "It is prudent when shopping for something important, not to limit yourself to Pound land"
    • MBFF
    • By MBFF 7th Oct 17, 10:20 PM
    • 12 Posts
    • 0 Thanks
    MBFF
    If I am asked by a lender I will disclose, I've never said I wouldn't. What I'm saying is if the question isn't asked how could they tell I was in a DMP as it's not a formal arrangement and wouldn't show on any report? I've looked through lending criteria and can only see references to CCJs, DROs and IVAs. Is it a question that is normally asked?

    I'm still unsure how I would be charged more interest if I'm no longer on a DMP, all defaults are gone and my affordability is good. If I am not asked 'have I ever been on a DMP' its not information I would freely give to a lender, I would however give it to a broker so they didn't go direct to MBNA and Natwest who I defaulted with.

    I'm not trying to be deceitful, just wondering why I would be charged a higher rate of interest if my credit report looked in good shape
    • csgohan4
    • By csgohan4 8th Oct 17, 8:45 AM
    • 4,015 Posts
    • 2,497 Thanks
    csgohan4
    If I am asked by a lender I will disclose, I've never said I wouldn't. What I'm saying is if the question isn't asked how could they tell I was in a DMP as it's not a formal arrangement and wouldn't show on any report? I've looked through lending criteria and can only see references to CCJs, DROs and IVAs. Is it a question that is normally asked?

    I'm still unsure how I would be charged more interest if I'm no longer on a DMP, all defaults are gone and my affordability is good. If I am not asked 'have I ever been on a DMP' its not information I would freely give to a lender, I would however give it to a broker so they didn't go direct to MBNA and Natwest who I defaulted with.

    I'm not trying to be deceitful, just wondering why I would be charged a higher rate of interest if my credit report looked in good shape
    Originally posted by MBFF

    They will know as they will run a full credit check and if you don't disclose any commitments or debts your paying off, your in trouble and a straight rejection potentially.


    Why would you not think a DMP is important to the lender?? you owe money, it's a debt, it's a monthly commitment just like people who pay for expensive rail season tickets of golf membership, it will all be taken into account for affordability, but more so for the DMP showing you were not good with your money hence the higher interest.


    Your credit report is not in good shape, the score means nothing, it's the history. If we both applied for a mortgage I would get a better rate than you because I have no debt, no DMP or CCJ's.
    "It is prudent when shopping for something important, not to limit yourself to Pound land"
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

320Posts Today

2,237Users online

Martin's Twitter