Mortgage 5 years after Debt Management Plan: My Experiences

tain

Just thought I'd share some of my experiences after successfully getting approved for a mortgage after a debt management plan, as I've found advice awful in many cases, and even brokers getting it very VERY wrong. I've got what I consider a mortgage at 'market rate' for 90% LTV.

**Please note that this is only my anecdotal findings after a LOT of trouble and difficulty. It could very well be that my experiences are exceptional, so don't take anything I say as fact, even if I've presented it as such. It's only a fact in my case.**

- A lot of brokers became very scared when I mentioned a debt management plan, with some giving me poor/incorrect advice even after telling them my last default was over 6 years ago and my credit file clear. If they don't talk with confidence about your DMP, find another broker. I even had the same large national broker give me contradictory advice between their own departments.

- As long as your last default was over 6 years ago (and therefore not on your file), it seems it doesn't make any difference when the actual plan finished. By the nature of the plans, the defaults can stop long before the management plan ends (mine was a year), so as long as there is no other record of the management plan on your file, you should have little to worry about. It's when the defaults go from your file that seems to be the 'end' to any lending issues. I was told by one large national broker that I simply could not get a mortgage at all until my DMP was 6+ years ago. The same broker wound up getting me the mortgage from Halifax at market rate.

- Further to the point above - if a broker insists some rubbish about lenders seeing a 'deeper' credit file that will show them information that no one else can see (including you), find a different broker. I've found no evidence that this is true, and I have a mortgage with a very competitive rate that says otherwise, in direct contradiction to what these brokers told me. One broker was confident in telling me the best I could get was a 4% deal from someone I'd never heard of, and told me to wait a year. I'm now paying half that.

- Some banks will still lend to you even though you may have defaulted with them in the past. I now have a mortgage with Halifax despite having 4 different products that I defaulted with them on 6-10 years ago. This will be very specific to the lender (and maybe broker), but do check, because again I was told categorically that I could not ever get a mortgage with Halifax by 3 brokers, yet here we are.

- Because of all the difficulties above, pay no attention to a broker offering a 'mortgage in principle' that is just their say-so. Get an official one from a bank that involves a credit check (which can be via a broker). I've got about 5 offers in principle, but only 1 of them was accurate and from the bank itself.

- We've borrowed a healthy 4.7x our combined salaries at a LTV of 90%, so it's not like we're scratching at the bottom end of the mortgage market. It really is a standard mortgage with a standard rate.

- I should add that I've been a model credit citizen since my last default in 2012. Not a blip against my name, and using credit cards slowly and fully paid for the five years.


I'm sure there is a ton in here that people will disagree with, or find up for debate. That's fine, I welcome it as I'm not an expert in any way. I've just found the whole DMP & mortgage advice VERY poor on the most part, so I hope that at the very least my ramblings might help someone dig further rather than settle for some ridiculous rate just to get a house.

MBFF

We are close to the end of our DMP having started it 6 years ago. All our defaults drop off in March 2018 and we are hoping to be in a position to look at selling our house and moving in June/July. The plan is due to end in March as well.

In the last 6 years we have kept our nose clean, but have no credit cards etc. Our only things reporting to the CRAs are a very account and mobile phone contracts both of which have always been kept up to date. Our credit reports are accurate and checked monthly via mse, noodle and clearscore

How long after the defaults dropping off did you wait before applying? Did you use a broker or go direct? We have very positive accounts with Nationwide that weren't involved in our DMP so thinking this could be worthwhile speaking to them. Did you have any difficulty getting the mortgage at all?

kingstreet

The OP says his last default was in 2012;-

I've been a model credit citizen since my last default in 2012

so an application was made while there was one default still visible.

MBFF

My mistake, missed that.

We have 3 defaults visible which all come off at the same time, just wondering how big an impact it will have on our potential to get a fairly large mortgage (61k combined income) we are looking at houses around 300k and have no other debt other than the 3k left on the DMP (it started at 26k due to a redundancy) there is around 60k equity in our home.

Apologies if this is hijacking this thread I can post my own for advice if needed

tain

kingstreet wrote: »

The OP says his last default was in 2012;-

so an application was made while there was one default still visible.

My mistake - that's when the DMP finished, not the last default! The last default was in May 2011.

tain

MBFF wrote: »

My mistake, missed that.

We have 3 defaults visible which all come off at the same time, just wondering how big an impact it will have on our potential to get a fairly large mortgage (61k combined income) we are looking at houses around 300k and have no other debt other than the 3k left on the DMP (it started at 26k due to a redundancy) there is around 60k equity in our home.

Apologies if this is hijacking this thread I can post my own for advice if needed

My defaults left my credit file around May this year, and we got our official decision in principle & credit check in July, so very very soon after my credit file was clear.

Your situation is freakily similar to ours! Exact same mortgage value, exact same combined income! We put down a 10% deposit, so I would wager you can use my example as fair confidence to make your application.

We used London & Country brokers for our mortgage. You may need to speak to their adverse credit department, but the guy we spoke to was extremely confident in everything he told us, especially compared to the other brokers who knew nothing. Just don't be put off when you first speak to someone - as I said above, they originally told me we couldn't get a mortgage at all!

Engeroosi

How much did London and county charge for adverse credit brokering?

tain

Engeroosi wrote: »

How much did London and county charge for adverse credit brokering?

They didn't charge anything, they take their fee from the bank who provide the mortgage. Their adverse credit section is the same as their regular section, just the people there know exactly what they're talking about so can advise appropriately.

jones101_2

Interesting post. My remaining defaults (from 2012) are due to drop in the next couple of months. So Im right in thinking there being a chance of getting a mortgage? My gf wants us to get a place and is willing to sell her flat (currently rented out) and use the profit for a healthy deposit. My DMP with Payplan is still running with about 15k left. Wouldnt the broker get suspicious of me being on a DMP when he scrutinises my bank statements and see a little monthly payment to Payplan on there?

Richard_Pia

I have had recent experience of arranging mortgages for clients still in DMPs - it is definitely possible. Ideally, you won't have missed any repayments on the DMP, and you'll have little or no adverse on your recent credit history (last 2 years or so).

ACG

Possibly normal rates are available, although depending on what is on your credit report, you may find you have to pay a little above.

Get your credit reports from someone like equifax or noddle and hand them to an experienced broker, they should more or less be able to tell you what is available before spending too much time on filling out paperwork having credit checks etc.