DMP - Impact on a Mortgage chance

Jungleblinded

Ok really need some serious advice on my financial situation.

I have around £15,000 debt with loans/credit cards. I'm currently making the min payment and most of it is just the interest and barely knocking anything off the actual debt. My income is around £1350 a month after tax, but every month is a struggle paying multiple cards/loans and normal bills like rent, fuel, council tax etc....
One thing stopping me from doing a DMP plan, is I have the chance to buy my council property at  a reduced price, but first I need to clear most of the debt but with only paying min payments it's not clearing it and every month I'm struggling. So I have a few questions about my situation?

1) If I went on DMP plan for a couple of the loans/cards(not all) does that rule out all chance of a mortgage? 
2) Is it worth struggling as it is to keep up the payments rather than dive into a DMP for the sole purpose of long term getting a mortgage(aiming between 12 to 24 months time)
3) Does it make a difference if I arrange 1 or 2 DMP directly with the bank rather than say doing a DMP plan on all credit cards/loans for a mortgage? By that I mean having 1 DMP plan set up and 6 other cards paying as normal, rather than 7 DMP plans set up does that look better for a mortgage application or is it same(ie bad either way).
I'm sick of struggling but buying this property is very important to me and if a DMP is a killer for a mortgage I need to know.
Ideally  the 2 loans I have are whats killing me monthly so getting a lower payment short term would be great and I pay the credit cards as normal, but unsure of the severity of the actions for a mortgage long term doing this(i.e 12 months time).

Any help be very much appreciated  

NewShadow

I had a DMP with stepchange back in 2014/15 which resulted in two defaults and I had 'most everything paid off by the end of 2015 - I was told by a broker I could likely find a lender with less favourable rates last year but I waited/applied for a mortgage with halifax this year and haven't had an issue; but that's me and my specific situation...

I think it's probably worth you talking to a broker about your specific situation and how a lender is likely to view your financial conduct over the short, medium and long term. 

There are some wonderful people on the debt free wannabe board who can help you with things like looking over your budget and identifying which of the people you owe are more likely to register defaults if you enter into an agreement with them - there's a handy way of looking at things called 'snowballing', where you pay minimum on all of your debts apart from one, ideally the one with the highest interest; throwing all your excess at that debt to clear it and then using the extra cash to pay off the next one faster... 

MovingForwards

A DMP is all or nothing, all the debts are included as it's preferential treatment.

There are, currently, mortgages available to those in a DMP and have been in one for a year or more.

Do you know how much of a mortgage you would need? 

How much are you currently paying on your debts each month?

Potentiality, you may be saving each month if the mortgage is cheaper than your rent, that would then give you the headspace to clear your debt.

Speak with a whole of market, adverse credit mortgage broker as s/he will have the knowledge of both eg having large debt to income and having DMP with mortgage.

There is an adverse broker on this forum, I had him for about 15/18 months before actually being in a position to apply for a mortgage, kept in touch, each change of circumstances I would update him, until one day I was able to say I think I'm in a position to proceed, let me know.

ACG

If you enter a DMP you are not going to get a mortgage for probably 6-12 months at least. Even then you are not going to get normal rates. The same goes for setting up a payment plan with your creditors, it will all be reflected in your credit report whichever route you take. 

Can you refinance the debts on to better deals? There is no magic answer, if you do not pay your debts on time and in full each month, it will likely affect your mortgage options and that will mean paying more interest on what I assume will be a bigger debt than your loans/credit cards. 

Jungleblinded

Thank you for all your information and advice,
I'd need a mortgage of about 90k after my RTB discount. Most of the debt arisen due to being self employed and borrowing money to keep the business going. Only recently I went full time and now in hindsight wasn't smart to borrow so much money.
Yes the mortgage would likely be lower than the rent hence it being frustrated feeling trapped right now not being able to buy.
The credit card debt I can handle in terms of meeting the payments, but I have two loans one from government enterprise loan and one from Amigo(interest is ridiculous) those two eat around 380 a month between them which is whats making me struggle. I've looked into getting one big loan to pay off a coupe so interest be lower and just 1 payment but I can't get that anywhere even though all payments have been met on time.

Edit: I did speak to one broke who said I could aybe get mortgage in DMP after I had 12 months of DMP repayments. But his fees are very high.

Jungleblinded

MovingForwards said:

How much are you currently paying on your debts each month?
Currently paying around £650 a month between them all. A couple of cards are still interest free but the bigger ones 'm paying interest on.

ACG

Jungleblinded said:

Thank you for all your information and advice,
I'd need a mortgage of about 90k after my RTB discount. Most of the debt arisen due to being self employed and borrowing money to keep the business going. Only recently I went full time and now in hindsight wasn't smart to borrow so much money.
Yes the mortgage would likely be lower than the rent hence it being frustrated feeling trapped right now not being able to buy.
The credit card debt I can handle in terms of meeting the payments, but I have two loans one from government enterprise loan and one from Amigo(interest is ridiculous) those two eat around 380 a month between them which is whats making me struggle. I've looked into getting one big loan to pay off a coupe so interest be lower and just 1 payment but I can't get that anywhere even though all payments have been met on time.

Edit: I did speak to one broke who said I could aybe get mortgage in DMP after I had 12 months of DMP repayments. But his fees are very high.

You can get one with probably 6 months payments of the DMP - but the fees and rates will be higher. All you are doing at that point is switching your expensive payments from your loans/CCs to the mortgage. It does not make sense. 

Just because something can be done, does not mean it should be. 

Its a RTB, it is not going anywhere. Concentrate on getting on top of your debts, either switching them of overpaying where possible and then once you are a better footing then work on getting a mrotgage at normal rates. What happens if something goes wrong with the house? At the minute, you call the council and they fix it. Once you are the owner you are on the hook for it. 

Jungleblinded

ACG said:

Jungleblinded said:

Thank you for all your information and advice,
I'd need a mortgage of about 90k after my RTB discount. Most of the debt arisen due to being self employed and borrowing money to keep the business going. Only recently I went full time and now in hindsight wasn't smart to borrow so much money.
Yes the mortgage would likely be lower than the rent hence it being frustrated feeling trapped right now not being able to buy.
The credit card debt I can handle in terms of meeting the payments, but I have two loans one from government enterprise loan and one from Amigo(interest is ridiculous) those two eat around 380 a month between them which is whats making me struggle. I've looked into getting one big loan to pay off a coupe so interest be lower and just 1 payment but I can't get that anywhere even though all payments have been met on time.

Edit: I did speak to one broke who said I could aybe get mortgage in DMP after I had 12 months of DMP repayments. But his fees are very high.

You can get one with probably 6 months payments of the DMP - but the fees and rates will be higher. All you are doing at that point is switching your expensive payments from your loans/CCs to the mortgage. It does not make sense. 

Just because something can be done, does not mean it should be. 

Its a RTB, it is not going anywhere. Concentrate on getting on top of your debts, either switching them of overpaying where possible and then once you are a better footing then work on getting a mrotgage at normal rates. What happens if something goes wrong with the house? At the minute, you call the council and they fix it. Once you are the owner you are on the hook for it. 

Yes thats sensible advice and to be honest that is my plan. DMP was a last resort just becomes frustrating and you never know with these governments if the RTB scheme gets scrapped so wanted to buy it as soon as possible.

But your right I should just concentrate on paying off even if it's slow as hell. Thanks for the help

MovingForwards

Jungleblinded said:

ACG said:

Jungleblinded said:

Thank you for all your information and advice,
I'd need a mortgage of about 90k after my RTB discount. Most of the debt arisen due to being self employed and borrowing money to keep the business going. Only recently I went full time and now in hindsight wasn't smart to borrow so much money.
Yes the mortgage would likely be lower than the rent hence it being frustrated feeling trapped right now not being able to buy.
The credit card debt I can handle in terms of meeting the payments, but I have two loans one from government enterprise loan and one from Amigo(interest is ridiculous) those two eat around 380 a month between them which is whats making me struggle. I've looked into getting one big loan to pay off a coupe so interest be lower and just 1 payment but I can't get that anywhere even though all payments have been met on time.

Edit: I did speak to one broke who said I could aybe get mortgage in DMP after I had 12 months of DMP repayments. But his fees are very high.

You can get one with probably 6 months payments of the DMP - but the fees and rates will be higher. All you are doing at that point is switching your expensive payments from your loans/CCs to the mortgage. It does not make sense. 

Just because something can be done, does not mean it should be. 

Its a RTB, it is not going anywhere. Concentrate on getting on top of your debts, either switching them of overpaying where possible and then once you are a better footing then work on getting a mrotgage at normal rates. What happens if something goes wrong with the house? At the minute, you call the council and they fix it. Once you are the owner you are on the hook for it. 

Yes thats sensible advice and to be honest that is my plan. DMP was a last resort just becomes frustrating and you never know with these governments if the RTB scheme gets scrapped so wanted to buy it as soon as possible.

But your right I should just concentrate on paying off even if it's slow as hell. Thanks for the help

You could always head over to the debt free wanna be sub-forum, put up a statement of affairs and the members will see if there is any fat to trim off your spending and make suggestions about how to pay it down.

amnblog

ACG said:

You can get one with probably 6 months payments of the DMP - but the fees and rates will be higher. All you are doing at that point is switching your expensive payments from your loans/CCs to the mortgage. It does not make sense. 

Just because something can be done, does not mean it should be. 

Its a RTB, it is not going anywhere. Concentrate on getting on top of your debts, either switching them of overpaying where possible and then once you are a better footing then work on getting a mrotgage at normal rates. What happens if something goes wrong with the house? At the minute, you call the council and they fix it. Once you are the owner you are on the hook for it. 

ACG - has hit the nail on the head here.
'Just because something can be done, does not mean it should be' 
Any Broker assisting you to purchase in this scenario is not doing you any favours.