DMP - Homeowner Loan

giddykipper

Hi all

I just wondered if you are 'allowed' to get your own homeowner loan in order to pay off your DMP???

Payplan have suggested that I remortgage to offer full and final settlements through Reach Finance .......but I wondered if I could go it alone and seek out a homeowner loan myself in order to offer full and final??

I'm really happy with the mortgage company I'm with so don't really want to swap to someone else ..... but I wasn't sure if a secured loan was classed as different to a remortgage? (and therefore fraud)??

TIA

National_Debtline

Hi giddykipper


I would always advise extreme caution when considering releasing equity from your home in order to pay off what is, after all, unsecured debt. Reach Finance is a separate arm of the same organisation that runs Payplan, and is presumably set up specifically to offer finance to those in your position. I offer no opinion on that arrangement, other than to say that you should always seek independent advice on your next steps.


I don't see that there's any fraud angle to worry about - a potential lender would usually ask about the reason for any remortgage or loan you sought, in which case the answer might be "debt consolidation" or something similar. This is a perfectly legitimate reason to refinance a property - whether it is a good idea is a separate matter.


You are free to shop around for potential remortgages/secured loans as you see fit. If your creditors are prepared to accept full and final settlements of a given amount, it won't ultimately matter to them how that money has been raised.


Dennis
@natdebtline

HappyMJ

giddykipper wrote: »

Hi all

I just wondered if you are 'allowed' to get your own homeowner loan in order to pay off your DMP???

Payplan have suggested that I remortgage to offer full and final settlements through Reach Finance .......but I wondered if I could go it alone and seek out a homeowner loan myself in order to offer full and final??

I'm really happy with the mortgage company I'm with so don't really want to swap to someone else ..... but I wasn't sure if a secured loan was classed as different to a remortgage? (and therefore fraud)??

TIA

Make sure it's worth it. The older the unsecured debt the more likelihood there is that they will accept lower full and final amounts to settle the loans.

As you will have defaults the rate you will get on a secured loan won't be great. Your creditors may have frozen the interest they charge but a secured lender will never freeze interest. You could get into a mess.

If your payments to your DMP are too high then lower them. There is no requirement to pay an unaffordable amount. You must pay your mortgage and ongoing household expenses as priority number one before paying unsecured creditors.

giddykipper

Thanks for your replies, it really does need some serious consideration.

At the moment my credit file looks good as I've been in my dmp for 9 years so none of the defaults are listed. Obviously I would have to declare that I needed the money for debt consolidation.......I just wondered if applying for credit whilst in a dmp would be classed as fraud.

I have another 18-20 ish years to pay on my dmp but it would appear that I could get a secured loan for the same monthly payment as my dmp but it will end in 10 yrs..... IF my creditors will accept full and final at 50% (I've already had a letter from my biggest debt people actually offering to accept 50%).

What with that letter coming through and payplan suggesting a remortgage, it just got me thinking.

Bettingmad

This plan makes no sense to me as you are turning unsecured debt into a debt secured on your home especially as you will still be paying it in 10yrs. It's very high risk in my opinion.
If you are prepared to take out equity in your home then surely taking an IVA is a consideration? I say this as what generally puts people off an IVA is potentially having to re-mortgage their home at the end of the IVA to release funds.

giddykipper

Bettingmad wrote: »

This plan makes no sense to me as you are turning unsecured debt into a debt secured on your home especially as you will still be paying it in 10yrs. It's very high risk in my opinion.
If you are prepared to take out equity in your home then surely taking an IVA is a consideration? I say this as what generally puts people off an IVA is potentially having to re-mortgage their home at the end of the IVA to release funds.

Payplan suggested this plan ....... as far as I'm concerned an IVA IS a consideration .....I was just looking at the suggestion they made from a different angle!