DMP & Remortgaging

weightlifted87

Hello 😊

We have been on a DMP with Stepchange for just over 3 years, started off with 67k and have paid off just over 10k. We've recently reviewed our budget and will be increasing our payments, predicted debt free date of July 2028.

We have started receiving letters with offers for early repayment - e.g. Debt of 7k with an offer to pay it and have it removed from our plan for 3.5k. Most letters seem to want half of the debt to have it cleared. Now that things are going well I was also thinking about starting to make offers to repay the smaller debts (snowballing I think this is 😁)

We have about 100k equity in our house as we've always kept the payments on our mortgage and house prices have risen dramatically where we live. I haven't contacted our mortgage lender yet but I'm wondering would they consider allowing us to take equity out to firstly pay off some of our debts but also for home improvements? We are obviously very settled into our DMP, everything is going well and our debts are coming down but I'm obviously aware that we may not be the most appealing homeowners to remortgage.

Has anyone taken equity out whilst on a DMP?

Also -  wondering if I took charge and sent some letters out offering repayment could we offer even less than half to get our debts cleared?

Thank you 😊

sourcrates

You can offer whatever you like, whether it will be accepted or not is a different matter altogether.

You should be very wary about turning unsecured debt into secured, which is exactly what you would be doing.

You are essentially just extending the time your in debt, and increasing the risk factor to yourselves.

You should take advice before doing anything.

fatbelly

I'm sort of with sourcrates on this - you realise you won't get the best mortgage deal with those defaults on file and they stay for 6 years.

What you might want to consider is not increasing your payments to the dmp but putting the surplus into a fighting fund pot with which to try full & final settlements.

You might need to manage the dmp yourself to do this most effectively. 

If you do go down the F&F route then our advice is that you should do CCA requests on relevant debts first, to check you're not wasting money on unenforceable debts

Suseka97

Definitely do NOT take out equity from your home (assuming you can) to pay off these debts.  Assuming you did then you'd be adding back interest to a secured loan when you are likely not paying any interest against the DMP debts.  You should follow FB's advice, not to increase your payments but instead start saving towards F&F's and go down the CCA request route.

weightlifted87

Thanks for your messages.

I've already done the budget review and the new payment starts in November, I'm not sure how I can ask them to lower it again now they have my revised budget?

Would we be likely to be accepted to take equity out for home improvement but keep paying the DMP? I'm guessing we're better off waiting til the debts are cleared?

Thanks everyone 🙂