Can I get a mortgage on a property I own whilst on a debt management plan?

Sunnydays27

Hey guys

Due to being young and foolish then being made redundant I don't have the best credit rating now and have also ended up with a CCJ 5 years ago, a default 3 years ago and currently on a debt management plan. I rent my house at the moment too. I have never missed a payment on my debt management plan.
I have recently found out that I have inherited a house mortgage free which I intend to move into and live there. However the house needs a lot of work and I was wondering if it would be possible to get a small mortgage to make the house more habitable (needs new windows, kitchen, bathroom, new central heating systems etc). The property is worth around £130k and maybe looking to borrow around 50k over 15 years? This would be for the work to be done and also to pay off my debt management plan. Would I have any chance in getting a mortgage? And would it be classed as a mortgage or a remortgage if i own the property mortgage free at the moment? Any help or advice would be greatly appreciated. I also don't want to sell the house as i feel like I have been given a lifeline to get my life and credit rating back on track and get out of debt asap. Thanks guys

phillw

Sunnydays27 wrote: »

And would it be classed as a mortgage or a remortgage if i own the property mortgage free at the moment?

I would have thought it would be a mortgage as you don't have one right now, remortgages assume that a previous lender was happy to lend you the money. I'm not sure you'd get a first time buyer deal as you aren't buying it. They will class it as releasing equity though as the money isn't funding a purchase.

I wouldn't do anything to the house until you've saved up some money to do it. Not having to pay rent should make a big difference to your ability to save. You'll appreciate the money and the improvements much more that way.

What you need to do is look into is whether inheriting a house will affect your debt management plan. I don't think it should, it would affect IVA or bankruptcy though.

If you don't need to change how your debts are being paid and it's cheaper for you to continue your debt management plan than try to secure a mortgage on the property to pay them off, then I wouldn't do anything.

If you must borrow money, then a mortgage might not be the most cost effective way of doing it. Especially if you clear your debts first and wait for your credit history to clean up.

Neutrinno

You may need at least 6 months of ownership before certain lenders may consider you. It is possible and a good idea to include paying your DMP.

It would likely be classed as a remortgage, even though it has no mortgage currently.

You are best speaking to a broker on this one due to your credit history and wanting to repay your DMP. Speak to a broker with experience in adverse credit mortgages.