Mortgage Possibilities after a DMP

mdnn85

I have just entered into a Debt Management Plan in order to sort my finances out once an for all however, although a long way away, I was wondering what happens once I come out of the plan (which is in approximately 5 years bases on the current set up).

I am 31 and myself and my husband are currently renting accommodation, which grieves us to be paying someone else's mortgage but its one of those things. My concern is that when I come out of the Debt Management Plan I will be 36 and no doubt some defaults will still be lingering on for a year or two after that, so will it be near impossible to get a mortgage at this point? Has anyone else been through a similar experience?

Thanks for any advice

nkkingston

There are a few options. The mortgage board is good for suggestions of high risk lenders (since with a DMP you'd be perceived as high risk) - you end up with a much, much higher interest rate and a lower offer, so it depends on what the housing market is like around you as to whether that would work out better than renting. Depending on your husband's finances and income, he might be able to get a mortgage on his own, but not all mortgage providers are willing to offer mortgages to only half of a married couple, so it'll limit your pool as well.

The longer ago your defaults are, the better the offer you'll get, so if I were you I'd look at this time as a period in which to start seriously saving your deposit (or possibly for your husband to start saving, so you don't get yourself tangled up with your DMP). The bigger your deposit, the more options will be open to you, so it's just a matter of getting yourself into the best possible place before hitting the big red button and actually starting to house hunt.

BrightLights14

How do you intend to save for a deposit while on a DMP?

mdnn85

BrightLights14 wrote: »

How do you intend to save for a deposit while on a DMP?

I wouldn't be saving whilst on the DMP, I would be saving once off it. Once I am off the debt management plan my disposable income and my husbands, it would allow me to save for a deposit within few years. My concern is however that being older and still potentially having a few defaults would a lender be likely to accept.

Granted this is a few years away however it was just curiosity that prompted me to post the question.

BrightLights14

Ah, that makes sense. I'm doing pretty much the same. I guess by the time you've saved (which I'm imagining will take at least a year) the defaults will have dropped off? Just make sure all your creditors default you sharpish (I think within 6 months is the standard time frame) - as the sooner they go on the sooner they'll come off, and any stragglers might hold you back!

Good luck!

January2015

Make sure all your debts have defaulted. If they haven't, chase the creditor for a default and ask for it to be backdated to within three months of the start of your DMP. Defaults, and all record of the account(s) disappear from credit reference agency (CRA) files after 6 years. Once they are all gone you will have a completely clean CRA files. This will happen regardless of whether the debt is cleared or not. 6 years from default date is a magic eraser for CRA files.

If accounts are not defaulted, but merely marked with late payments, or arrangement to pay - this information stays on the CRA files until the debt is cleared and then for six year AFTER that. So if you have another 5 years on DMP and debts are not defaulted - then you potentially have another 11 years of poor credit information on your CRA files (5 years of DMP marker payments and 6 years once debt it cleared).

La_escocesa

Definitely don't worry about being too old. If you take out a mortgage when you are 40 you will still be able to go for a standard 25-year term assuming you will work until you are 65. I was looking at mortgages today and the term said that you need to be 'not over 75 before the end of the mortgage term'.

mdnn85

January2015 wrote: »

Make sure all your debts have defaulted. If they haven't, chase the creditor for a default and ask for it to be backdated to within three months of the start of your DMP. Defaults, and all record of the account(s) disappear from credit reference agency (CRA) files after 6 years. Once they are all gone you will have a completely clean CRA files. This will happen regardless of whether the debt is cleared or not. 6 years from default date is a magic eraser for CRA files.

If accounts are not defaulted, but merely marked with late payments, or arrangement to pay - this information stays on the CRA files until the debt is cleared and then for six year AFTER that. So if you have another 5 years on DMP and debts are not defaulted - then you potentially have another 11 years of poor credit information on your CRA files (5 years of DMP marker payments and 6 years once debt it cleared).

Will a company mark an account as defaulted on request? Also, would I be best to request this in writing?

January2015

mdnn85 wrote: »

Will a company mark an account as defaulted on request? Also, would I be best to request this in writing?

Not necessarily - but you can request it. You should write and mark your letter COMPLAINT. Quote the Information Commisioner's Officer Principles for the reporting of arrears, arrangements and defaults at credit reference agencies

Principle 4 of the ICO's document states:

If you fall into arrears on your account, or you do not keep to the revised terms of an arrangement, a default may be recorded to show that the relationship has broken down.
As a general guide, this may occur when you are 3 months in arrears, and normally by the time you are 6 months in arrears.

You can write and argue that their being advised you were entering a DMP meant you fell into arrears on the contractually required payments and as such the relationship had broken down. I would also argue that their incorrect reporting of your account, by not recording a default in a timely manner, is unfairly disadvantaging you for an unnecessarily extended period of time.

mdnn85

January2015 wrote: »

Not necessarily - but you can request it. You should write and mark your letter COMPLAINT. Quote the Information Commisioner's Officer Principles for the reporting of arrears, arrangements and defaults at credit reference agencies

Principle 4 of the ICO's document states:

If you fall into arrears on your account, or you do not keep to the revised terms of an arrangement, a default may be recorded to show that the relationship has broken down.
As a general guide, this may occur when you are 3 months in arrears, and normally by the time you are 6 months in arrears.

You can write and argue that their being advised you were entering a DMP meant you fell into arrears on the contractually required payments and as such the relationship had broken down. I would also argue that their incorrect reporting of your account, by not recording a default in a timely manner, is unfairly disadvantaging you for an unnecessarily extended period of time.

Thank you so much, I wouldn't have been aware of that at all. I will get writing the letters tonight

Puzzcat

January2015 wrote: »

Not necessarily - but you can request it. You should write and mark your letter COMPLAINT. Quote the Information Commisioner's Officer Principles for the reporting of arrears, arrangements and defaults at credit reference agencies

Principle 4 of the ICO's document states:

If you fall into arrears on your account, or you do not keep to the revised terms of an arrangement, a default may be recorded to show that the relationship has broken down.
As a general guide, this may occur when you are 3 months in arrears, and normally by the time you are 6 months in arrears.

You can write and argue that their being advised you were entering a DMP meant you fell into arrears on the contractually required payments and as such the relationship had broken down. I would also argue that their incorrect reporting of your account, by not recording a default in a timely manner, is unfairly disadvantaging you for an unnecessarily extended period of time.

Unfortunately they do not all play ball and even after official investigation one of my creditors is still not defaulted despite being sold on, but I was told they had done nothing wrong. So yes you can ask, complain, take it further but don't always get the answer you want.