Help with DMP/Second Charge Decision

Michaelhorton106

Good morning everyone

After reading this site and all the helpful advice for a long time, I thought it a good chance to post my own predicament.

For background, my house is worth £250,000 (minimum valuation), I have a mortgage of £87,000, a second charge of £60,000 and credit card/loan debts totalling £28,000 which have become too much for me (therefore I've missed a couple of the recent payments).

Having spoken to Step Change, they've mentioned a debt management plan to get the debts cleared down. The difficulty with that is my disposable income totals around £100, which would of course take a very very long time to pay off. I've spoken with the firm which I have my current second charge with, and they've advised I will be able to top up the charge in 3-6 months to cover the amount outstanding.

My question is: ideally, I would like to re-mortgage to get rid of the outstanding debts and the second charge, however my current credit rating won't allow a mortgage application at this time. If I were to enter into a Short term arrangement with the banks, I've been told I could get the increased second charge within 3-6 months. Thereafter, I'm thinking I could pay that until I can get my credit score up to apply for a bigger mortgage

A) will the banks even consider a short term arrangement of this kind
will even a short term arrangement affect my credit score? My concern is I don't want anything to hamper my ability to get a mortgage if I can keep up good payments for 12 months to get it up to scratch
C) is this even a good idea?!

Many thanks for your help

National_Debtline

Hello Michael

The banks may consider a short term reduced payment arrangement at their discretion but it may affect your credit scoring depending on how they mark your credit file.

I suggest taking some advice from an Independent Financial Adviser (IFA) ideally, as you could benefit from someone who is able to look at the whole market of mortgages and secured loans available.

Your current lender will only look at their own financial products which may not necessarily be the best value for you in your current position.

An IFA will probably charge you a fee though. You could at least get some independent advice on re-mortgaging from the Money Advice Service on 0300 500 5000.

www.moneyadviceservice.org.uk

James
@natdebtline

Michaelhorton106

Thanks so much for your reply James, it's great to get some help on this!

I wonder, is it possible to negotiate with the banks along the lines of "if you are able to accept a small temporary payment which doesn't affect my credit score, in 3-6 months I will be able to re-pay you in full. Otherwise, if it's shows an arrangement on my credit file, it will prevent me taking out a secured charge and you'll be waiting for the money for the best part of 10 years"

Are we (consumers) able to negotiate with the bank on these terms? Or perhaps could Step Change do it on my behalf?