Mortgage Refusal - default removal 2 February 2022 at 2:36PM in Credit file & ratings 7 replies 233 views

RPL188491

Long story short, we have been paying a DMP for several years now and we only have 2 creditors left on this (Started with 9). We have been looking at getting a mortgage and the 1 thing that is stopping us is that one of the remaining creditors has us down as 'defaulted' as they have not been receiving the minimum monthly payment through the DMP - this goes back 3+ years. (& yes the interest rate on the mortgage we are seeking will be a lot higher for now).

Basically, I phoned the creditor and they have point blank refused to help us or even look at removing this default even though they have been receiving a payment from us every month. If we pay this off in full after our house sells, what is the likelihood of us then receiving a mortgage? Would it be years down the line? Can we negotiate with them and ask them to take it off if we pay the full outstanding balance?

Thanks in advance for your help.

[Deleted User]

Not really - the default is a reflection of how you managed your account.

The best you can do is to settle the outstanding defaults. While old creditors remain unpaid, other lenders will doubt you'll be any keener to pay new ones back. 

Then you move forward with your mortgage.

RPL188491

So once we pay off the remaining debt in full, how long do you reckon it would be before we would be likely to get accepted for a mortgage? Albeit a high interest rate.

[Deleted User]

Speak to an adverse credit broker. They'll be best places to guide your application to the right lender.

Thrugelmir

DMP isn't going to aid your cause. If you've the money to purchase a house then settling the outstanding debts first should be the priority.  In a broad sense. Treating the DMP as an interest free loan is generally frowned upon within the finance industry. 

RPL188491

That's not what we are doing. We do not have the money at present. We were selling the house and using money from that to pay off any debt! So it is taking priority! You've got this all wrong I'm afraid!

Sncjw

I think even if you laid it off it will stay on your file another 6 years.
Also any debts you have 2ill be taken into account and taken off the amount they are prepared to lend in a mortgage too. 

[Deleted User]

Sncjw said:

I think even if you laid it off it will stay on your file another 6 years.
 

It'll drop off 6 years from default, regardless.