Getting a mortgage after settling a debt management plan

silvercup

My husband and I are FTB and starting to look at getting a mortgage.

We have checked our credit files with the 3 agencies and both are healthy - no defaults or CCJs or anything. We will have a 10% deposit and affordability good.

However my husband is currently in a DMP through Stepchange, owing 5K. As his defaults were over 6 years ago there is no trace of these debts on his credit file and nothing to suggest he is on a DMP.

We have seen a broker who has come back with a recommendation of applying for a mortgage through Vida Homeloans with an interest rate of over 5%. Obviously we were hoping for something more favourable. I should mention that the broker has not asked for a copy of our full credit reports - we gave him our scores only, which I since understand doesn't really mean a lot.

We are now thinking that our best course of action is to settle the DMP before looking for a mortgage, especially if we can do so through reduced full and final settlement offers. But the broker has told us that if we did so, the DMP would still have an adverse effect for 36 months afterwards.

However as I said he has not seen that on my husband's credit file there is no trace of the DMP debts.

So my questions are these: If we were to settle the DMP, how would any lender know that it was there in the first place (assuming that we waited 3 months so that repayments weren't reflected on bank statements and we weren't specifically asked about it?) If we made full and final settlements to the creditors, would any kind of marker be placed on my husband's credit file? The 36 month comment seems a bit arbitrary when there's nothing adverse on his credt file?

ACG

You say the DMP is not on your credit reports, but the monthly repayments presumably are on your bank statements?

You may also find some of your creditors share information between other companies in the same group (Natwest/RBS/Mint for example are all part of the same group).

Also, some lenders ask if you have ever set up agreements with your creditors.

Appreciate the above sounds quite negative, but I just wanted to point out there is more than just your credit reports that lenders look at. If you are not happy with what the broker has come back with, you could try another broker to see if they have the same thoughts?