Secured loan to pay off DMP

Timbo40
Timbo40 Posts: 8 Forumite
Third Anniversary First Post
Hi

I’ve got a DMP, it’s over 6 years old, I’ve paid off chunks as and when I can when I get a bonus from work or have spare cash, but I’ve still got 18k left on it. We want to move house in the next couple of years and use some of our equity to clear the DMP, but know that any decent lender won’t look at us with a current DMP. I really want to get rid of it ASAP, get straight/improve our credit for a couple of years, and then move.

Our loan to value is currently 47%, we have nearly 100k equity in the house. Contacted our lender (NatWest) to see if they would let us borrow extra on the mortgage to clear it off but they’re not interested.

So now I’m looking into secured loans. Are there any reputable ones out there who won’t rip us off? We’re ‘pre-approved’ for ocean finance apparently, but I’m concerned they might be a dodgy one!

Any advice welcome.

Comments

  • What do you mean by “dodgy”? Consumer lending in the UK is highly regulated, and the terms and conditions that you sign at the start of the deal are what apply to you throughout, so it’s not as though any company can just change the rate or add charges that weren’t there in writing at the start.
  • Timbo40
    Timbo40 Posts: 8 Forumite
    Third Anniversary First Post
    What do you mean by “dodgy”? Consumer lending in the UK is highly regulated, and the terms and conditions that you sign at the start of the deal are what apply to you throughout, so it’s not as though any company can just change the rate or add charges that weren’t there in writing at the start.
    I just mean generally unscrupulous, things hidden away in small print, high rates after the initial fixed period, difficulty removing the charge when we sell etc?
  • molerat
    molerat Posts: 34,279 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    edited 26 June 2021 at 2:30PM
    Ocean Finance are a non prime broker not a lender and add a fee on top of the loan - they find you a loan between 5.1% and 89.9% which is pretty much why they can pre approve almost anyone and with a DMP you are not going to get anywhere near the bottom end - your are unlikely to get a loan that is not going to "rip you off".  A loan secured on property to pay off debt is rarely a good idea - "Your home is at risk if you fail to keep up with the payments" - so if another curve ball is thrown you could find yourself in a B&B !.  If you want to move and release some of the equity it would likely be best to speak to a specialist mortgage broker.
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Timbo40 said:
    What do you mean by “dodgy”? Consumer lending in the UK is highly regulated, and the terms and conditions that you sign at the start of the deal are what apply to you throughout, so it’s not as though any company can just change the rate or add charges that weren’t there in writing at the start.
    I just mean generally unscrupulous, things hidden away in small print, high rates after the initial fixed period, difficulty removing the charge when we sell etc?
    Secured lending is highly regulated.  Always read the small print/ask questions before you purchase anything. Might well be cheaper to focus on clearing the DMP yourselves (i.e. interest free). Then approaching a mortgage broker that specialises in the adverse credit market. 
  • ThisnotThat
    ThisnotThat Posts: 500 Forumite
    500 Posts Name Dropper
    If you're on a DMP presumably your debts have defaulted so you're not paying interest?  I'm not sure why you'd want to turn interest-free debt into what will almost certainly be high-interest rate debt, secured on your home to boot.

    Having a large loan is going to have a significant impact on affordability for the mortgage as well.
  • sourcrates
    sourcrates Posts: 31,070 Ambassador
    Part of the Furniture 10,000 Posts I've been Money Tipped! Name Dropper
    Don`t do it, interest rates tend to be high, and variable, miss a payment, the charges alone can add up to £50 or more.

    You should look at other, more inventive ways to clear the debt, for example, are all your debts enforceable, have you submitted CCA requests ?

    Are all your accounts defaulted and sold on ?

    Debt purchasing companies are much more open to settlement deals, anywhere between 20 & 75% discount can be achieved if your are persistent and keep at it.

    Borrowing to pay off existing debt, especially secured borrowing, is just a folly in most cases, and can lead to you losing the house if life throws you another curve ball, as another poster pointed out above.

    Basically its a very bad idea, when other, more sensible options are available to you.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • DCFC79
    DCFC79 Posts: 40,622 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    As your in a dmp your not meant to take out more credit, have you spoken to who your dmp is with, maybe they will lay things out for you.  
  • sourcrates
    sourcrates Posts: 31,070 Ambassador
    Part of the Furniture 10,000 Posts I've been Money Tipped! Name Dropper
    DCFC79 said:
    As your in a dmp your not meant to take out more credit, have you spoken to who your dmp is with, maybe they will lay things out for you.  
    That is technically true, but DMP`s are not regulated so there is no tangible penalty if they did.

    However, its a really bad idea anyway.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 349.9K Banking & Borrowing
  • 252.6K Reduce Debt & Boost Income
  • 453K Spending & Discounts
  • 242.8K Work, Benefits & Business
  • 619.6K Mortgages, Homes & Bills
  • 176.4K Life & Family
  • 255.8K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 15.1K Coronavirus Support Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.