Mortgages and Debt Management Plan

Jaywat30

I have a mortgage (currently £700 per month) and have never missed a payment on anything or been in arrears, but am just in the process of entering a DMP. Our house has been up for sale for 2 years and we have just accepted an offer on it today. Our DMP will be paid back at at least £350 a month. Will I be able to get another mortgage to move?

Tixy

Once you are in a DMP then you are likely to get defaults entered on to your credit file as you are no longer keeping up with contractual repayments.

Very recent defaults will likely make it quite hard to get a new mortgage or at least one at a decent rate.

Probably worth talking it through with your DMP provider (hopefully one of the free providers/ charities?) and perhaps considering trying to hold off on the DMP for a few months if you can manager to keep up with payments a bit longer.

Are you planning to buy a more or less expensive house? will you need a larger or smaller mortgage on your new house?

Jaywat30

The DMP hasnt actually started yet we are in the process of putting it through, so I did think about contacting the charity to put things on hold. The DMP provider which is a charity couldnt actually answer the question for me. We are planning on a smaller mortgage, reducing it by at least £5,000 so our mortgage will be smaller. We have £40k equity but if we used that towards our debt we wont have enough for a deposit.

chanz4

Are the terms of the dmp prevent further taking out of credit?

ACG

When you sell the house can you not use the equity to pay off the debts?
Then save up for another deposit?

Avoid a DMP wherever possible as you will struggle to get a mortgage for YEARS after it finishes and will need a good 20-30% deposit.

nzmegs

Use the equity to pay off your debt, rent for a while (getting a tenancy should be Ok as your credit rating isn't affected - yet). Then save like crazy for another deposit in a couple of years time.

You will be free of debt, without a DMP and in a decent position to get a mortgage.

JencParker

nzmegs wrote: »

Use the equity to pay off your debt, rent for a while (getting a tenancy should be Ok as your credit rating isn't affected - yet). Then save like crazy for another deposit in a couple of years time.

You will be free of debt, without a DMP and in a decent position to get a mortgage.

OP - could you rent anywhere for less than £700 per month where you live? If not, then you are jumping out of the frying pan into the fire. You may be better to hold onto your property and arrange a DMP.

Tixy

You may be able to port your current mortgage to a new property. Your current mortgage lenders may accept that if the mortgage is not any more and if the LTV is not any less.