debt management plan and mortgage query

alabama1985

Hi all,

myself and my husband are hoping to apply for a mortgage within the next few months. We both made mistakes in the past however have not missed any payments in 3+ years. We also have a relatively high credit card balance of around £9k which means our credit scores aren't great. I have a small CCJ dropping off this September (however we need the mortgage before this time)

anyway, I have a DMP with Capquest for an old 'very' account, which I pay off monthly, the balance at the moment is £359, however they have offered me a large discount to settle the debt for £107, and the debt will be marked on my credit file as partially settled.

My question is, if I pay off at the discounted rate of £107 will this look bad for the mortgage?? financially obviously we are in a better position to pay off the £107, but should we stretch ourselves to pay the £359 off instead and have it marked as fully satisfied? or should I just go with the £107? will there be a major difference credit score wise?

thanks in advance.

alabama1985

ok thank you. That makes sense! I was just wondering as obviously we are saving for a deposit, and if it didn't make that much difference then we'd rather have paid the less amount but what you say makes total sense. will see what we can do, thanks!

ACG

Get a copy of your credit report.
Is the DMP for Very on there or was it started over 6 years ago and has dropped off?

There is not enough information to give an accurate answer but I would expect you to be able to get a mortgage. But are you looking at rates of 2% or 5%? That will depend on your credit report and deposit.

alabama1985

ACG wrote: »

Get a copy of your credit report.
Is the DMP for Very on there or was it started over 6 years ago and has dropped off?

There is not enough information to give an accurate answer but I would expect you to be able to get a mortgage. But are you looking at rates of 2% or 5%? That will depend on your credit report and deposit.

thanks, I just checked and it defaulted in April 2014, so it's been nearly 5 years. We are hoping to apply around April time this year, so I guess my best bet is to pay off the full amount (perhaps by dipping into our deposit savings) to at least show it's paid in full?

ACG

For the sake of £350, I would just get it satisfied.
The sooner it is satisfied the more likely you are to get a normal mortgage.

Are you sure it is a DMP? Is it not an arrangement to pay?
It will make a big difference.

alabama1985

ACG wrote: »

For the sake of £350, I would just get it satisfied.
The sooner it is satisfied the more likely you are to get a normal mortgage.

Are you sure it is a DMP? Is it not an arrangement to pay?
It will make a big difference.

ahh ok, I think it is just a arrangement to pay actually come to think of it! how can I be certain?

ACG

Did you set up the payment plan with the company who owns the debts or another company like stepchange who will take your payment and pay the creditor(s) on your behalf.

alabama1985

ACG wrote: »

Did you set up the payment plan with the company who owns the debts or another company like stepchange who will take your payment and pay the creditor(s) on your behalf.

it went straight to cap quest after defaulting with very, so yes i believe it's an arrangement to pay rather than DMP actually (sorry just getting to grips with all the terminology!) no 3rd party like stepchange is involved.

chanz4

capquest don't do dmp's

louisee86

Sorry to jump on your question but I cannot work out how to create my own post.
so myself and husband are looking to get a mortgage.i have a CCJ which will be 6 years in July.its for £1500.my credit score is fair and I have a credit card.husbands credit score is very good.
if we apply for a mortgage now (have 20% deposit) will we be accepted by any decent lenders?and if we wait and I don't pay it off how long will it be before mortgage lenders cannot see the CCJ?

ACG

With a 20% deposit there should be options out there at reasonable rates, maybe not market leading but not far off.

The CCJ would drop off after 6 years (although might be 6 years 1 month depending on when your report updates). At that point you should have access to the majority of lenders.