Remortgaging while still in a DMP

cjwandrum

Help!

My fixed rate deal with Northern Rock comes to an end this month, after which my rate drops by nearly two percent to 4.79. I really want to try and get a fixed rate deal arranged for my remortgage, but I am currently in a DMP with CCCS. The DMP has just a little over £33000 in it, the bulk of which is my unsecured loan from Northern Rock as my original mortgage was a 125% loan. I am currently sitting at an LTV of 95%, with a mortgage balance of £87000. From this month onwards I will be overpaying my mortgage by the amount that it reduces to after the rate reduction, but I still want to try and find some kind of security for my long term rate should the BOE raise the base. (Not likely in the next year or so I know.)

I am 30 years old, my income is £32000, and I have three salary increments to achieve, which are guaranteed. In three years time I will be earning £36000, which will be my maximum salary unluess I get promoted at work. My employment is secure, I can't be made redundant, and I have 23 years left till I retire. Unless the governement change our pension rules as they are considering at the moment, but this would only prolong my employment, not shorten it.

Can anyone out there give me some advice please, as this is my first remortgage, and we only found ourselves in financial difficulties due to a loss of second income, and the following credit overstretch that ensued!

Thanks to everyone that can help.

sammyjammy

I'm sorry but I don't think you have a hope. I'm only speaking as a layman but with that level of debt under an arrangement to pay and a LTV of 95% nobody will touch you.

Koicarp

We didn't remortgage while on DMP (I don't think it would have been possible) but our then lender Natwest did allow us to fix rates for a £200 arrangement fee.

Thrugelmir

You need to accelerate repayment of the DMP. As this will hold back any possibility of you remortgaging for many years yet.

cjwandrum

What I did have in the back of my mind was to overpay my mortgage as much as possible over the remainder of it's term. I have a loan due to come to an end in 18 months time, which returns £174 to my monthly budget. Adding that to the £111 overpayment that I am going to be making anyway would bring my mortgage down pretty quick. Once I had my mortgage down to a good level of LTV, around the 50-60% mark, I was going to remortgage to consolidate the remaining debt in the DMP back into my morgage, and then continue to overpay my mortgage by the £285 in addition to my DMP monthly payment of £184. Working from rough calculations, this will take me approximately 6 years to achieve, my only worry is the BOE base rate between now and then. What do people think? Is this a sensible approach, or not really the most cost effective way to reduce my debts?

Thrugelmir

Consolidating to clear a DMP is an unlikely to be an available option. At least with mainstream lenders.

Switch your mortgage and loan with NR onto a repayment basis. Use any additional money you have to clear the DMP quicker.

Will be a long term project but at least you'll retain your home.

cjwandrum

My mortgage is already a repayment, that was what I wanted right from the start. NRAM have reduced the interest on my loan to 0%, and that is included in the DMP. I haven't touched on the subject with them yet, but I was hoping they would consolidate the loan into my mortgage when the equity level was suitable. I appreciate that they probably wont, as NRAM will not provide any new funding, they are purely in existence to deal with the bad debts side of the NR entity! But you never know! If I could get the loan sorted, that would leave the remainder of my debt sitting at around £7000, which I would be able to clear in less than 2 years. Do you know how long a DMP is reflected on my credit report?

Thrugelmir

Chicken and egg situation. You can either overpay the mortgage and save yourselves money. Or clear the DMP quicker which will enable you repair your credit record quicker.

If money could be an issue. Then the mortgage may be advisable for a while.

A DMP will impact your credit record for some time post settlement. There's no hard and fast rules.

Alternative is to sell up, clear your debts and rent for a while.

Koicarp

I do wonder how you are convincing CCCS that overpaying your mortgage is more important than paying your available cash into the DMP?
At our annual reviews CCCS wanted to know about every penny we had coming in and going out, and expected all available cash to go into the DMP.

javorb

we are in a dmp and at the moment no lender will remortgage us ,looking to get 80% ltv ,to extend house and increase value by £130000 and pay off dmp but due to remortgaging twice (£25k total)in the last year while doing up a cottage that had not been lived in since 1979 and increasing value by £70000 no lender will give us a mortgage ,even though future debt free ltv will be 43% ltv.
I have posted before and received a lot of neg replies but correct me if you can i am paying off my debts without taxpayers help ,if the banks were a person they would have been bankrupt a long time ago

bigadaj

javorb wrote: »

we are in a dmp and at the moment no lender will remortgage us ,looking to get 80% ltv ,to extend house and increase value by £130000 and pay off dmp but due to remortgaging twice (£25k total)in the last year while doing up a cottage that had not been lived in since 1979 and increasing value by £70000 no lender will give us a mortgage ,even though future debt free ltv will be 43% ltv.
I have posted before and received a lot of neg replies but correct me if you can i am paying off my debts without taxpayers help ,if the banks were a person they would have been bankrupt a long time ago

All credit to you for dealing with your debts but he fact you are in a DMP means that you aren't paying a commercial rate for you borrowings, and so are arguably being subsidised by other customers