How do I get a mortgage after I've settled my DMP ???

Caspar54

I settled my DMP 7 months ago and want to get a mortgage. Lots of " specialist " companies say shouldn't be a problem at first then come back and say I need an astronomical deposit or will have to pay 6% interest. I feel I shouldn't even have bothered paying my debts off as I'm in no better position. I struggled to pay them all off and I still get penalised. I feel it is so wrong that I'm being judged solely on a messy divorce resulting in debts whilst it went through that happened so long ago and that I'm.not being judged on the person who paid all these debts off and has managed to save a substantial deposit too. Any advice would be greatly received. By the way I'm 54 so I can't really wait 6 years for my credit report to be cleared .:o

[Deleted User]

Caspar54 wrote: »

I settled my DMP 7 months ago and want to get a mortgage. Lots of " specialist " companies say shouldn't be a problem at first then come back and say I need an astronomical deposit or will have to pay 6% interest. I feel I shouldn't even have bothered paying my debts off as I'm in no better position. I struggled to pay them all off and I still get penalised. I feel it is so wrong that I'm being judged solely on a messy divorce resulting in debts whilst it went through that happened so long ago and that I'm.not being judged on the person who paid all these debts off and has managed to save a substantial deposit too. Any advice would be greatly received. By the way I'm 54 so I can't really wait 6 years for my credit report to be cleared .:o

What's showing on your credit files? Defaults, if yes how many and how old? Any CCJ, if yes how old and are they settled?

How much of a deposit do you have saved?

comeandgo

Can you afford 6%? If it's the only way to get a mortgage maybe bite the bullet and do it. After a couple of years you could remortgage on to better rates.

Caspar54

Hi there is currently only 1 default showing which is being disputed .

Caspar54

I have 15% deposit saved but apparently that is not enough ? I only want to borrow £90000 so it's not like I'm being unrealistic and looking to buy an expensive house.

MovingForwards

It's because the lenders want 12 months of being out of the cleared DMP.

My interest rate is 5.57 and 15% deposit, when I complete my purchase.

I decided the pain of a high deposit, higher interest rate was worth it to get out of renting.

I picked an adverse broker from this forum as I liked his style speaking with people on MSE and when I spoke with him on the phone/ used email.

Caspar54

I have 15% deposit saved but apparently that is not enough ? I only want to borrow £90000 so it's not like I'm being unrealistic and looking to buy an expensive house.

amnblog

You are being unrealistic in your attitude to your credit history.

A DMP is confirmation that you have previously borrowed money, failed to repay within terms, then applied for reduced terms, costing your creditors.

A mortgage lender taking on such a borrower is taking on higher than average risk that the same will happen again.

Hence:

The business needs to be extra profitable - hence the rates
The risk has to be reduced - hence the deposit requirement
Expect the Lender to explore the reasons for your previous problems to understand if they are likely to re-occur.

Your options are to work with the available terms, or wait until your DMP is much more historical giving you access to more lenders.

ACG

With a 15% deposit there should be options below 6%.

But I think as AMN says, you need to be realistic, you are 7 months out of a DMP, that does not really prove you are no longer a higher risk than the average person. Yes, you paid off your debt, but that was what you agreed to do on a second attempt after failing to maintain your contractual agreements.

I am not having a dig there, we specialise in bad credit, if I judged people based on bad debt we would be out of business. I love working with adverse customers as I find it far more interesting than vanilla stuff, but I tend to find people who have had debt issues fall into 2 categories, (1) learn from it and never have any credit issues again or (2) do not learn from it and remain habitually bad with money. At 7 months, a lender can not determine which category you fall into. You are not going to be getting 2% interest rates for a little while (maybe a year or 2) , but I would like to think something around 4% should be achievable on a 2 year fixed rate.

Thrugelmir

Caspar54 wrote: »

I'm.not being judged on the person who paid all these debts off and has managed to save a substantial deposit too.

From the banks perspective. Your choice was to save a substantial deposit rather than repay your debts quicker. A DMP isn't an interest free loan. Financial relationships are two way.

RelievedSheff

With your recent history of bad credit you just have to accept that you are not going to get the best interest rates. If you really want to get a mortgage now you will need to take a shorter term mortgage with a higher interest rate and then remortgage in a couple of years to a better rate.

This is what we have had to do due to my credit history. I had two CCJ's on my report last year when we took out a mortgage in April. Due to this we took out a 2 year fixed rate with an adverse lender at a high rate (5.1%) to secure us the house that we wanted. We are almost a year into that mortgage now so it really won't be long before we can remortgage onto much lower rates as my adverse credit will have disappeared. If rates don't change too much we will be able to keep our mortgage payments much the same but drastically reduce our mortgage term.