Wont a DMP ultimately cost more in the long run?

ferry

Hi all . I am considering a DMP and have looked at a lot of posts on here and everybody has differing circumstances.
My problem is that I have a mortgage. If I was to enter a DMP I would effectively be giving up my potential to good rates, being eligible only for sub prime rates making my mortgage payments more expensive?
Therefore am I right in thinking that entering a DMP to keep payments down will actually cost more in the long run?

Im just looking at things from a homeowner point of view and could be wrong but wondering if its best just to meet the monthly minimum payment long term until hopefully matters improve?

Any thoughts?

F x

enthusiasticsaver

Yes a DMP will affect the rates you will be offered but your credit history is not good you won't get good rates anyway. Paying only monthly minimums unless you are on 0% deals will take a long time to clear the debts.

sourcrates

Any form of debt management is going to be reported in a negative way on your credit file, as a homeowner, you only have two, maybe three choices if you are struggling to pay down your debts.


Debt management is the least invasive, lots of people just make minimum payments, but its the length of time it takes to pay the debts off that can be a worry, if you can afford the minimums, then carry on as you are, its always more difficult for homeowners, and does depend how much debt you actually have, if its a lot, then the priority would be shifting it, and worry about the consequences later.


I know we have spoken before, but i cannot remember your exact situation.

National_Debtline

H Ferry


As mentioned above, if your debts are not affordable your credit file will be affected, which in turn could affect renewing your mortgage.


You need to start by completing a statement of affairs (SOA). If that shows you do not have enough spare money each month to pay your debts your credit file is going to be affected anyway, and a DMP could be a good way to manage the debts. If the debts are affordable then you will not be eligible for a DMP but you will be able to get hints and tips from the board on ways to pay off your debts off quicker.


You can complete a SOA here http://www.stoozing.com/calculator/soa.php. I'd recommend posting it back on the board for further advice (remember to use the format for MSE button).


Best wishes


Susie
@natdebtline

sammyjammy

Most lenders will let you move to a new product without any credit checks at all as long as the term and other info remains the same. I recently changed mine online, it took a couple of minutes.

4f02

I can never understand why if you are scraping by on the minimum payment its better to stay that way? Its never gonna get paid off, surely these CC companies can see that.why let someone carry on being milked? If you ask them to help they very rarely do till you default and even then let the interest keep racking up.

You can understand even people who can afford to pay debts feeling trapped for years and years with CC debt.i feel it

January2015

I'm a homeowner, 3 and a bit years into my DMP.

I am not on any 'offer' for my mortgage. That ended before I started my DMP and my mortgage moved the track the Bank of England base rate. At the moment I pay 0.5% above base rate.... which is probably as good as any mortgage deal I could find anyway.

When the base rate increases my mortgage will track it, but if the base rate goes too high I will approach my lender and see if I can move across to one of their deals. I have an excellent payment history with my mortgage and as I am not increasing my debt I hope it won't be a problem to switch products within the existing lenders portfolio of offers.

Even if they don't allow me to switch, I will just continue tracking the base rate. That's still far better than any sub prime mortgage offer.

So as far as I see it, if I don't move my mortgage I will be okay. Have you looked at it in that way?

Suseka97

I too am a homeowner and, as Jan15 has said - if you stay with your current provider then you should be fine. I'm 4+ years into a DMP and when my fixed term offer ended during that period I just dropped to a tracker 0.5% above base rate (which was actually cheaper than I had been paying). Recently I decided to 'fix' and had no problems doing so (and the % is not at sub prime rates).

You should use one of those calculators that tells you just how long you'll be paying off those CCs if you keep just paying the minimums -and how much interest you'll be handing over during that period. Seriously - if all you can do is afford the minimums, you're not really helping yourself and I would have thought your focus should be to get debt-free as soon as possible.

ferry

My concern is that there wont be a new decent rate available with my provider Santander when the time comes early next year. If the only option is their SVR this will add around £200 a month to my payments.

Anyone with experience of Santander?
Thank you

January2015

ferry wrote: »

My concern is that there wont be a new decent rate available with my provider Santander when the time comes early next year. If the only option is their SVR this will add around £200 a month to my payments.

Anyone with experience of Santander?
Thank you

No experience with Santander, but over on the DMP mutual support forum, I've read many posts where people have stayed with existing lender but moved to one of their current deals when the existing deal they have been on has expired. It doesn't seem to be an issue to stay with the same lender but change mortgage deal as long as they are not increasing their borrowing or the term of their debt.

To be honest, I think for the majority of us on DMP the worry of mortgage deals was not the first thought when we had reached the point of needing a DMP. We needed to sort the issue with unsecured debts first and foremost in order to stay on top of the secured debts and be able to live. The positive thing is that if the secured debt interest rate increases, and hence the monthly payment increases, then that takes priority from your I&E budget. So if you pay more to your mortgage then you have less to pay unsecured creditors.

Personally I don't think it will cost me more in the long run. Unsecured interest rates (which are now all zero for me) were far higher than any mortgage rate is likely to get to (and yes I have had mortgage rates in the early 1990s of 15% and that wasn't sub prime either).

walletmoths

I'm a homeowner and I currently have a DMP with Christians Against Poverty. (I'd recommend their 3-evening free course to anyone, btw). It took me 5 years of begging my old mortgage company to allow me to move to a much cheaper house, but with CAP's help we finally did it.



Then, we were able to start our DMP with them.


In your case, it's a case of "what do you want the most?". Do you intend to move in the near future? Do you want more loans, cards, and more debt in the future? A DMP plan means you can't do any of that - you just pay off the debt (over 10yrs in my case), and CAP arrange to make sure you don't pay any more interest or charges too.


It's good to have one payment coming out, knowing that it'll all be paid off eventually - and to have someone else dealing with the nasty letters etc.


The downside is that nobody will touch you for a mortgage, loan, card, overdraft, car finance or anything else. You are forced to live to your means. Not a bad thing really. Stops me getting into debt again, for sure. But, when you do need something, the "no" can be very painful indeed. For example, on moving day, my bank knew that if I borrowed the removals fee on an overdraft, they'd get their money back, 100% guaranteed. They still said no.


So, we were faced with being left on the pavement with all our stuff. Fortunately, family rallied round to help.


So... if you can pay the proper payments, do so. But if you can't, then do the CAP course to get a head start on living to your means.