FA's a question please:your reaction to clients entering DMP?

kingstreet

I think the OP is talking about a follow-on product, or remortgage for a new rate, I don't think the issue is a house move.

In a DMP, your options are going to be limited. You are likely to find rolling onto your current mortgage's follow-on rate, possibly standard variable, which happens automatically with no further checks will be the first option.

The second may be a customer retention product. These are offered by lenders at the end of a deal, as an alternative to SVR. Again, there are no checks carried out on status or income. You may be able to pick from a few different rate/fee/term options.

Finally, a remortgage may be an option, but this is likely to see a higher rate with the need for a specialist provider and this may not be a smart option, considering those above.

You should not look to borrow more money, unless you intend to use it to repay your debts.

alarmed

kingstreet wrote: »

I think the OP is talking about a follow-on product, or remortgage for a new rate, I don't think the issue is a house move.

In a DMP, your options are going to be limited. You are likely to find rolling onto your current mortgage's follow-on rate, possibly standard variable, which happens automatically with no further checks will be the first option.

The second may be a customer retention product. These are offered by lenders at the end of a deal, as an alternative to SVR. Again, there are no checks carried out on status or income. You may be able to pick from a few different rate/fee/term options.

Finally, a remortgage may be an option, but this is likely to see a higher rate with the need for a specialist provider and this may not be a smart option, considering those above.

You should not look to borrow more money, unless you intend to use it to repay your debts.

Sorry to drag up an old thread but wanted to ask more advice please on an update and yes,its the remortgaging/foolow on that concerns me.
I have been offered a secured loan to cover my debt-before you scream dont do it at me I haven't accepted-I need to ask if in this instance it may be the alternative for us?
The credit cards are cut up and we have reviewed our outgoings,the new payment will be around £300 less than paying off the CC debt.
The plan then would be to slightly overpay the mortgage.
Not ideal,but my train of thought is that my credit file remains intact and come remortgage time I wont be subject to an adverse rate which may cancel out any savings being made by doing a DMP?

I know the ultimate decision is ours but just wanted to get opinions which I appreciate.

Dave_Ham

Why a secured loan instead of a remortgage and raising finance for debt consolidation?

Assuming you have been managing this credit and have no defaults, multiple missed payments etc?

alarmed

Dave_Ham wrote: »

Why a secured loan instead of a remortgage and raising finance for debt consolidation?

Assuming you have been managing this credit and have no defaults, multiple missed payments etc?

This is exactly why I'm confused about what to do.I would love to use some of the equity we've buit up in earlier years as we could do with it now.
My mortgage advisor has enquired about additional borrowing from our existing lender and this is a no go as they changed their lending criterior.
We'e about 8 months away from being able to remortgage and are subject to a ERC of around 3.5k if we do so before then.

No defaults up to this point.

Dave_Ham

If you can maintain payments for the 8 months, it will be hugely advantageous to hold off and remortgage the mortgage + consolidate the debt.

Beg, steal and borrow if you need to as I would be very surprised if the secured loan is in your best long term financial interest.

If your advisor is pushing the secured loan, then I doubt they are offering you the best advice for you.

ACG

Another option is, if you can afford to overpay on the mortgage - why not do the loan over a shorter period? That will be the debt which is at the higher rate, so your best paying that off first.

However, i do agree with Dave in that adding the debts to your mortgage will be the cheaper option - although it will be secured against your home, so you need to weigh up whether your happy with that.

Thrugelmir

alarmed wrote: »

This is exactly why I'm confused about what to do.I would love to use some of the equity we've buit up in earlier years as we could do with it now.

In the context of mortgage lending. Equity is not a pot to be drawn on or used like an overdraft. So lenders would much prefer that you borrow at much higher personal loan or credit rates instead.

kingstreet

If the secured loan is penalty-free, or only requires perhaps a month's notice (?) to repay it, you could take it now to solve your short-term problems, then include it in the remortgage when that is a goer?

alarmed

kingstreet wrote: »

If the secured loan is penalty-free, or only requires perhaps a month's notice (?) to repay it, you could take it now to solve your short-term problems, then include it in the remortgage when that is a goer?

Thanks again
I think I need to check the paperwork to see if its worth paying an extra 3.5k ERC now to remortage and consolidate the debt or if I do take the loan would the settlement figure in December be more than December loan balance + 3.5k if you see what I mean!

kingstreet

That's why I asked about the settlement of the secured loan. If you are only required to give a month's notice and there's no penalty, the secured loan could be a useful temporary fix.