Advice needed - remortgage when on dmp

bells_on_it

Hi I’m after some advice.

Myself and my husband entered into a dmp 18 months ago as a result of me being made redundant and my new salary being considerably lower than before. I’ll add the debts we had were down to necessary home improvements (damp/boiler/electrics/burst water pipe) which took us to around 35k.

We’ve agreed the dmp , we felt this was the most responsible and moral option for us and have been paying this off successfully and all of our creditors are happy with the arrangements.

We’re at a point where we need to spend money on our house, our shower room is failing , the shower itself is breaking, and there is damp forming on the wall on the other side. It’s a downstairs shower room so our preference is to have a wall mounted shower upstairs in our bathroom but it will mean our current bathroom needs remodelling. In addition to the shower we have a number of issues that need putting right with our kitchen. Our oven knobs are falling off, the dishwasher is breaking but the gap it’s in won’t fit a standard dishwasher and is too wide for a narrow one, the flooring has a number of holes in it , a couple of the lower shelves are drooping and these are just a few of the issues.

Our present mortgage lender approved us on the credit check but it was referred as a result of the dmp. We were advised that it was rejected and appealed listing the reasons for the debt (investment in the house) the reason for the dmp and additionally why we wanted to take remortgage.

We have 20 years on our mortgage, have been with the lender for 13 years and never missed a payment (we went back to 25 years when we moved house in 2013).

The balance is around 194 and our house valuation is around 300-310k. We’re currently on a flex fix mortgage so whilst our rate is fixed for another 4 years we can exit at any point with no penalties.

We wanted to take our borrowing to 214k to get a new kitchen as the present one with its issue is also really poorly designed therefore not effectively using space. As I mentioned before we also need to remodel the bathroom so we can get a shower in there.

Are we fighting a losing battle? Our current provider is Coventry and we have always been happy with them but wonder if we need to look at other possibilities?

And is there any point in pushing the Coventry to reassess any further? Or see if they will agree if we add a couple of years to our mortgage?

We believe the investment will only add to the value of the property.

Thanks for any advice you can give

enthusiasticsaver

You are not supposed to take out any further borrowing if you are in a DMP so you are unlikely to get a remortgage approved by anyone. It does not really matter what the reason was for the DMP. If you have defaults, which you must have this will not be attractive to lenders. How long is the DMP set up for? You are best off saving and doing the work bit by bit.

Thrugelmir

The issue you face is that you've recently defaulted on debts that you owe. Now you wish to borrow money more money to improve your house. If you can afford increased mortgage repayments why aren't you clearing your DMP quicker? Underwriters likewise will be aware that as lenders they have a regulatory duty to act responsibly. Allowing you to borrow more doesn't meet this requirement.

bells_on_it

Hi thanks for the responses. In terms of the repayment, it’s a small amount of increase and if we extend the term it will be negligible.

The works required are necessary therefore we thought that best to get it done properly than to do it twice ie we could save over a period and get the shower fixed however it would likely cost 2k But would be throwing money at the short term solution rather than doing the long term.

csgohan4

adding value to the property is one thing, but adding more debt to someone with a DMP is another which unfortunately the lender sees as too high a risk.


Hit that DMP hard, the debt free wannabee forum is a good place to start

bells_on_it

We were also thinking that as the house has over 100k equity tied up in it that it would be treated more as an equity release?

We’re not irresponsible borrowers we had essential works required done to the house and unfortunately I lost my job . The DMP was to manage the repayments so we were being honest.

kingstreet

Your only option will be an adverse credit lender at a higher rate. Speak to an independent broker ab out your options.

bertiewhite

bells_on_it wrote: »

the dishwasher is breaking but the gap it’s in won’t fit a standard dishwasher and is too wide for a narrow one,

Absolute necessity, a dishwasher.

ACG

You spent £35,000 on damp/boiler/electrics/burst water pipe??? Do you live in Buckingham Palace?

Why not remortgage to clear the DMP at the same time as taking money out for the home improvements? As Kingstreet says, you will need an adverse lender, rates of around 4%. You might be able to get a secured loan so at least your mortgage remains with coventry but the extra is the only part on a higher rate.

Have you thought about downsizing? Spending money that you do not have when you are in a DMP seems silly/irresponsible (that last word is important as it is something that lenders take seriously as the FCA have come down hard on irresponsible lending over the last few years).

bells_on_it

Hi thanks for the replies.

In terms of the damp / boiler etc, yes unfortunately it was that much. The house was suffering from water ingress, the previous owners had used cement to point an old stone house and additionally painted its the paint work was failing and the pointing was cracking as it was the wrong material used for pointing stone. So we had an independent damp survey and it was advised that the pointing needed replacing with lime mortar which meant stripping out the existing pointing, and additionally the house either needed re painting which wasn’t advised or long term sensible due to the elevation it would need scaffolding every time, so the advice was to have the paint taken off the house. So it did cost circa 25k. I was in a better paid job and it we could afford the repayments. The boiler and cylinder needed replacing because the boiler failed and the repairers condemned it because it was unsafe. The pipe under the house burst so we had to get a new water main moles in and the electrics were live in the house which we discovered when getting shocks from the shower.

All of this and the redundancy was unforeseen.

I agree a dishwasher isn’t essential, but with 4 in the house and 2 kids under 6 it helps when we both work full time. And we can go without it. It’s not a deal breaker but it is breaking. The oven does need replacing as the knobs have snapped off the front and some of the shelving in the cupboards are collapsing. The flooring is badly laid tiles with lots of holes in it where the floor wasn’t level.

Some of the works are essential, others we just felt could add to the investment. The kitchen hasn’t actually enough space in it due to the poor design. Silly things like a gap for a fridge was so narrow that when it broke we needed a new fridge freezer and couldn’t fit a standard width fridge in it so had to remove cupboards. The washing machine which is a standard depth is too deep for the counter so you cannot access one of the cupboards properly and it’s affecting the hinges.

I appreciate that we could add to the mortgage with our DMP but we have been advised not to as the debts were unsecured and we are managing the dmp responsibly and making the agreed payments.

We may not be able to talk to another lender and would prefer to stay with the Coventry. But I’m just after advice on whether there are any lenders who may entertain this ie some people on this board have posted about getting a mortgage when on a dmp and people have been able to advise avenues?

getmore4less

Your best bet sell up and take more care over the next one and try not to buy a broken one this time.

A lot of those things should have been spotted before you bought it only 5 years.