Mortgage after finishing a DMP

Bennyg82

Good Afternoon Everyone,

I have recently finished paying of a DMP which I was in due to being made redundant a couple of times and falling behind due to high levels of debt.

I also finished paying off a loan to my parents. I have arranged to make some over payments on my student loan so by April I will be debt free and should be able to start saving a size-able amount of cash each month.

We are also selling our house - more so for necessity as we have a boy and a girl and currently they share a room so we need an extra bed room. We have resigned ourselves that we are going to have to come off the housing ladder temporarily. I have looked at my file and on Experian and 2 of the creditors I was paying on the DMP are marked as default from 2011 and 2012.

I have never missed a council tax, Utility or mortgage payment in the 10 years I have been in the property and I do have equity in it - probably circa £18K.

I can afford a mortgage bigger than I need, even at a higher rate and I also have a deposit. I have been employed for 3 years at the same place and as a household we earn circa £60K. I am 32 so still have plenty years left of employment ahead of me. My parents have also kindly offered to act as a guarantor although from what I have read this usually doesn't overcome bad credit history, just high LTV.

So, advice please;

1) At what point may I be considered for a new mortgage?
2)What should I do to improve my chances (savings, mortgage over payments prior to selling, pay of credit card in full)
3)Would my current mortgage provider consider me knowing I have never missed a payment prior to this?

kingstreet

Bennyg82 wrote: »

recently finished paying a DMP... 2 of the creditors I was paying on the DMP are marked as default from 2011 and 2012...I do have equity in it - probably circa £18K.

1) At what point may I be considered for a new mortgage?
2)What should I do to improve my chances (savings, mortgage over payments prior to selling, pay of credit card in full)
3)Would my current mortgage provider consider me knowing I have never missed a payment prior to this?

More time, or more deposit. Those are the big issues. The more of one, the less you need of the other.

Lenders look at the amount and registration dates of defaults and when they were satisfied to a lesser extent.

You can't do anything to counteract adverse credit. Only deposit v time are the healers.

You haven't said who your current lender is. They won't consider you just because they are your current lender. If they are flexible on adverse credit they might. This would be pure coincidence of circumstances.

Thrugelmir

Bennyg82 wrote: »

I have looked at my file and on Experian and 2 of the creditors I was paying on the DMP are marked as default from 2011 and 2012.

The impact of the DMP should not be underestimated. A far worse blot to have on your credit file than a default. The DMP tells a lender much about you as a potential borrower.

I also have a deposit.

You should have repaid your DMP off quicker. Lenders are fully aware of what people attempt to do.

Murphy2011

I am hopefully in a position that I will never need to take out another mortgage after paying off my DMP but I find it sad that paying off my debt in its entirety rather than defaulting is looked on in a worse way by lenders?

My DMP is because of redundancy, mental health issues, death in the family, etc etc....if lenders now have to look at your eating out habits, how much you spend on hair cuts etc before offering a mortgage you would think that they might give consideration to facts behind a situation.

Sorry, rant over, I'm extremely lucky to be able to repay my debt and also to be older and already on the housing ladder, OP, I wish you luck!

Thrugelmir

Murphy2011 wrote: »

I am hopefully in a position that I will never need to take out another mortgage after paying off my DMP but I find it sad that paying off my debt in its entirety rather than defaulting is looked on in a worse way by lenders?

Default is a technical term for breach of contractual terms. Non payment changes the perspective entirely.

Murphy2011

Thrugelmir wrote: »

Default is a technical term for breach of contractual terms. Non payment changes the perspective entirely.

Totally agree as above but a lot of defaults are for lending which is never going to be repaid and people are allowed to walk away from it with the same effect on their credit history as someone who has fully repaid the debt, just seems a little unfair?

It's an emotive subject and I wouldn't want anyone to think I'm criticising their personal choices, we are all in a "There but for the grace of God" situation to a certain extent, you never know what is around the corner as I found out the hard way!!!

Thrugelmir

Murphy2011 wrote: »

Totally agree as above but a lot of defaults are for lending which is never going to be repaid and people are allowed to walk away from it with the same effect on their credit history as someone who has fully repaid the debt, just seems a little unfair?

Lenders don't forget. Walking away may be easy. At a later date may come back to haunt you once you least expect it.

Nor forget the world is a changing place. May not seem to be. One by one levers are being pulled. That combined will have a fundamental impact.