Getting A Mortgage With Debt Management on History

reddyteddy

My sister has been in a debt management plan for a few years now after a marriage break up caused finacial issues, all of the defaults on her credit file are due to come off in the next few months but 2 catalogues type creditors still report her accounts as active but in a DMP, I could potentially help her financially and wonder if it would be worth trying to pay off the catalogues in full to show her credit history in the best light possible? 

If she applied for a mortgage with these two records on her file showing a DMP but paid off in full what do we think her chances of mortgage success would be? There is no other record of her DMP on her files after the defaults drop off at the end of the year.

She would have approx. £50,000 to pay down when she can access her ex's pension next year and maybe looking for a mortgage of around £20,000 so a healthy deposit which would help surely?

reddyteddy

Should add the debts are with Arrowglobal now

[Deleted User]

She needs to consult a decent adverse credit broker.   Although the DMP will drop off her files, she may still be asked about it and depending on the debts involved, lenders may still have internal knowledge.

She'll also be limited by the size of the mortgage which is too small for many lenders.

How long would it take her to save a further 20k? 

Fighter1986

Help us with the figures a bit -

Does she already own a property? Is there already a mortgage against it which she's looking to clear? E.g. buying out her ex or something?

Or is she looking to buy a property and she's currently renting?

It's unlikely shell be granted a mortgage while in a debt management plan. That will need to be clear first. Then she will need to use a competent all of market broker to help her find an adverse credit lender. This shouldn't be an issue considering the size of her deposit. 

reddyteddy

No, she currently rents so looking to buy locally, flat in a decent area would be circa £70k and she will be able to access £50k from her share of ex's pension early next year.
She can't save as rent is expensive so will need to borrow a little to buy a property.
She currently has £11k in total under debt management due to be paid off in 2049! I wonder if the creditors would take a 25% payment now to clear it off?

It looks like Arrowglobal will be on her credit file regardless so I don't know if it will make much difference to her credit rating if it is fully or partly satisfied? Everything else will be off the radar in a few months once the defaults go.

Fighter1986

Her priority when she accesses her drawdown from her ex's pension is settling all her debt. 
It's a breach of her DMP to take on board any further credit while it is outstanding - that includes a mortgage.
It would also be a breach of her DMP to withold funds after a payout like that.

Once she has the funds available, they may indeed be willing to negotiate a reduced full and final settlement.

Once the debts are cleared, it will take upto two months for her credit files to reflect that, at which point she will be able to look at applying for a mortgage. Her adverse credit history will still negatively affect her creditworthiness, but with a deposit of that sum, a good all of market broker like London & Country should still be able to find her something suitable at a good APR.

Re: Fully or partially satisfied it's not going to make a discernible difference in this scenario.