Debt Management Plans and Mortgages

baileyhsi

Hello!

I would really really appreciate some advice from someone in the know about my situation which I will do my best to summarise below...

Myself and my partner have a combined salary of £50k and have plenty of spare cash to save/pay mortgage payments, I have no worries about affordability
We have a £6k deposit saved and the folks are going to help out with arrangement fee and legal costs.
We have found a house for £110k which is an absolute bargain (amazing house in a terrible area which is on the up) but we need to move quickly to secure it as a low offer is already in on it from someone else.
This means we are going for a 95% LTV.
The stumbling block is that I currently pay some of my older debts off through a debt management plan to various debtors. The total debt is around £18k but I only pay £150 per month. Ordinarily I think this should mean I have no chance but actually my DMP was organised really quickly and I never actually missed a payment so my credit report still looks good and I have never been refused on any credit checks in the previous 4 years.
The folks also are happy to act as guarantors on the mortgage and they own their own property in full.

My question then is whether or not my DMP is going to seriously affect my chances of getting a mortgage? If so is there anyway we could write the mortgage in my partners name only?

Any advice would be really really helpful, I am trying to organise mortgage meetings at the moment but a heads up before I go in would be brilliant.

cheers in advance

kingstreet

It won't make life easy. On the basis you are facing a much higher bar to cross to get approval for 95%, I'd say you are probably better off applying in your partner's sole name, as long as his/her income is high enough.

IIRC there are only a couple of lenders offering 95% at the moment, Skipton and Hanley Economic, so it shouldn't take too long to run the question past them.

Thrugelmir

Suggest you get to grips with your DMP. Repaying £18k at a £150 per month is going to take a long long time to clear.

baileyhsi

Thanks kingstreet, I'll take a look at going in my girlfriends name only at the same time. My question then would be would the lender take in to account the fact that I would be paying all the bills if the affordability calculation was being done in my girlfriends name only?

To Thurgelmir, you are quite right, I do need to get to grips with it, the last few years have been a case of staying on top of things really but I've got a decent wage coming in now so the thinking was get on the property ladder then start bashing away at the debts with the spare cash.

Really I still have an open question though which is a little more specific. I knew my DMP would make life a little harder but if accompanied by a good credit rating and low payments going out do the lenders care as much? Is suppose I'll find out shortly!

Thanks for your help

CLAPTON

what exactly do your credit files actually say?

kingstreet

The affordability calculator will assume your partner is responsible for all the expenditure which applies to the property. The downside of a single applicant case is no-one else's income can be taken into account.

I knew my DMP would make life a little harder but if accompanied by a good credit rating and low payments going out do the lenders care as much?

If you needed only 75%, I'd say no, more than likely they wouldn't. However, at 95% you are competing for limited funds from only a couple of lenders with applicants who don't have a DMP.

I don't know where you are but Tipton & Coseley and Marsden have products which may be useful to those who may be able to get help from relatives.

Thrugelmir

baileyhsi wrote: »

I knew my DMP would make life a little harder but if accompanied by a good credit rating and low payments going out do the lenders care as much?

The DMP will impact on the lenders internal credit scoring. The score you are seeing from your own enquiry. Unfortunately counts for nothing.

Conrad

Even at 75%, lenders usualy decline those with a DMP. In one example the lender told me they could not reasonably justify extending someones borrowing where the applicant had failed to keep up repayments in full on thier existing debts and that in any event they would have to seek authorisation from the debt managers that extending debt was justified- in in my example the managment company dedclined to allow a mortgage as they argued the existing creditors should be repaid out of the applicants savings.

Furthermore FSA rules on responsible lending would almost never be satisfied where someone on a DMP was having thier debt increased with a mortgage so any broker arranging such deals needs to understand they could be liable in the event the borrowers subsequently get into trouble. A brokers insurance would not cover this liability as it too will preculde such 'advice' from being sound and appropriate.

baileyhsi

Well I got my answer. Rang up Skipton for an agreement in principle and failed my credit check with flying colours. After checking my credit file with creditcall two of my debtors have listed me as defaulting on my payments even though I have never missed a payment and have an agreed payment plan in place. I also have no chance now of cleaning my credit report for the next few years.

My girlfriend will have a clean (maybe too clean) credit report but probably not quite enough salary to justify the affordability of the payments on her own.

Dreams officially dashed.

Thanks to everybody for your help.

CLAPTON

baileyhsi wrote: »

Well I got my answer. Rang up Skipton for an agreement in principle and failed my credit check with flying colours. After checking my credit file with creditcall two of my debtors have listed me as defaulting on my payments even though I have never missed a payment and have an agreed payment plan in place. I also have no chance now of cleaning my credit report for the next few years.

My girlfriend will have a clean (maybe too clean) credit report but probably not quite enough salary to justify the affordability of the payments on her own.

Dreams officially dashed.

Thanks to everybody for your help.

Just to say, that by not paying the full contractual payments of your loans then this is a default.
The fact you made reduced payments properly isn't relevant to the default status.

baileyhsi

CLAPTON wrote: »

Just to say, that by not paying the full contractual payments of your loans then this is a default.
The fact you made reduced payments properly isn't relevant to the default status.

Just spoken to Apex and Marlin and they are both happy to take this up with the original debtors as they don't believe it should be listed as a default. I did not expect that.