Mortgage following DMP

MBFF

Hi,

Looking for some advice around getting a mortgage following my DMP.

I have completed a DMP recently and all 3 credit reports are completely clear, the defaults were almost 7 years ago so nothing is showing on my credit files. The debts were fully paid and no partial settlements were made therefore my open and closed accounts only show a previous car finance that was fully paid off before the DMP started. My wifes reports are identical.

Between myself and my wife we have very little credit; a Very account with nothing on there, a Littlewoods account which has £150 on it and my wife has just took out a credit card to attempt to rebuild some history (used once a month and repaid in full each month) The only other things that reports to my credit file is my mortgage which has never been in arrears and has been paid on time throughout, BT, Vodafone and OVO energy (all clear history and no defaults)

A couple of questions. My mortgage was originally a Northern Rock Together mortgage, so, on 2 of the reports the unsecured element is showing as a loan (albeit from Landmark mortgages) Would this hinder any mortgage application? I'm assuming that underwriters are aware that the mortgage is split into 2 but paid as 1 and would be paid off simultaneously?

We have around 60k equity in our home having had it valued a few months back, my earnings are 38k + 4k mileage allowance, my wife's is 10.5k we are also in receipt of child benefit as we have 2 children age 4 and 9, this totals 1.7k a year. We are looking at houses around the 250-270k mark, is this realistic? Ideally we would want to retain 10k of the equity to deal with moving costs. We obviously have no debts to repay either.

In terms of looking at mortgages we plan on using a broker, but really just after an idea of whether high street rates would be available and what the likelihood in being accepted would be.

Thanks for any help

ACG

The loan should not be an issue. Providing it was paid on time every month it is not a problem. If you plan on keeping it going forward, it will go down as a commitment and will affect affordability but it should not affect getting the mortgage.

The £4k mileage allowance, if it is a mileage allowance then I do not think you will be able to use it as it is covering an expense. If it is a car allowance, then you probably can use it.

On the face of it, your income (minus the £4k) would allow you to get a Mortgage of around £250,000 plus your deposit on top, so £250-270k should be fine.

However, without knowing whether the loan will remain and if so what the repayments will be (my understanding is the rate on that loan will increase if you redeem the mortgage?) and also without seeing your credit reports and knowing who you owed money to in the DMP, it is difficult to say for sure and also what the likely rate will be. It could be anything from normal rates, up to around 4%.

You have not said anything that makes me think it can not be done however.

MBFF

Thanks

We would be looking to use the sale price of our house to repay both the mortgage and the loan at the same time. The payment is made in 1 lump and as the interest jumps by 8% if either part is redeemed without the other we want to clear the whole amount.

The mortgage is around 85k and the loan about 20k leaving an overall balance about 105k vs a valuation of 165k.

Our credit reports no longer show any debtors but we previously defaulted with Natwest (loan and CC for 19k), a Virgin CC of 4k and a Mint CC of 1.5k so understand that we would need to steer clear of those.

The mileage allowance is exactly that, I get the 4k to cover travel costs to and from my place of work (it costs me around 2.5k a year to travel)

The only other thing is my wife recently started a new job and has only been there for 6 weeks, she has a probationary period of 3 months but nothing is indicating that it will not be permanent as her company is going through massive growth.