DMP or sort it myself - planning for mortgage

nobbyclarke123
nobbyclarke123 Posts: 21 Forumite
Fourth Anniversary 10 Posts
in Debt-free wannabe
Hello there everyone.

I have been on this forum in the past, and previously used a stepchange DMP to resolve my payday loan crisis many years ago. 

however since this time, corona has come along and ruined all my hardwork. 

I'm currently in a situation of £17800 total debt, income of £2600 & outgoings of £2133.
These figures are from my debt remedy on step change's website. 

Debt Percentage of total payment
HSBC 1900 10.67557871 49.81652
Barclaycard 390.08 2.191752497 10.22759
Aqua 1645 9.242803677 43.13062
capital one 717.93 4.033851698 18.82357
Zope 10520.06 59.10933085 275.8278
Paypal 2624.56 14.74668256 68.81392
17797.63
I have drawn up a plan based on the total debt value and a percentage payment of the totals. 

however, the issue i have is that i would like to be able to get a mortgage in the future. I am conscious that if i enter a DMP this will register lots of defaults on my credit report. 

I currently only have missed payments listed on the PayPal account. and am trying to minimize the overall impact of sorting my debts out. According to my plan above i could clear the debts in just over 3 years. leaving my 3 further years to get into a good mortgageable shape.

I have a  car that I will be putting up for sale with a hopefully £5k sale price which I will use to clear off the PayPal balance, and possibly some of the card debts also. 

can anyone offer any advice on the options;

a) do it myself with the above plan
b) stepchange DMP
c) any other options suitable

Thanks in advance


 

Comments

  • EssexHebridean
    EssexHebridean Posts: 24,202 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    edited 9 May 2022 at 11:17AM
    First step - SOA, there's a link in my signature which takes you straight to one of the calculators we recommend.

    That's a lot of debt to have run up in the space of just a couple of years - I appreciate that the pandemic has impacted a lot of folk really hard, but even then, that's a pretty steep figure to have arrived at. have the issues that arose out of the pandemic now been sorted so you're back on a properly even keel again? The SOA will clarify where savings might be able to be made on your outgoings anyway. 

    The issues with trying to do things without incurring defaults is that it's likely to mean interest continuing to rack up, which of course reduces the effects of the payments you make. I understand your point of view about wanting to apply for a mortgage, but realistically, how long will it take you to clear that level of debt just by making overpayments while interest continues to be added?

    Sort the SOA, and have a play with the snowball calculator which is linked in the sticky thread at the top of the board, too - that will confirm your timescales. 

    Remember - if you're looking at three years to clear, then an additional three to get things in good order, you might just as well go for the defaults ASAP - they should then hopefully be through inside 6 months, so not adding that much to your planned date for beginning to look at mortgages, but meaning that you will be debt free (and so in a position to begin saving for a deposit) that much sooner. 
    🎉 MORTGAGE FREE (First time!) 30/09/2016 🎉 And now we go again…New mortgage taken 01/09/23 🏡
    Balance as at 01/09/23 = £115,000.00 Balance as at 31/12/23 = £112,000.00
    Balance as at 31/08/24 = £105,400.00 Balance as at 31/12/24 = £102,500.00
    £100k barrier broken 1/4/25
    SOA CALCULATOR (for DFW newbies): SOA Calculator
    she/her
  • nobbyclarke123
    nobbyclarke123 Posts: 21 Forumite
    Fourth Anniversary 10 Posts
    EssexHebridean said:
    First step - SOA, there's a link in my signature which takes you straight to one of the calculators we recommend.

    That's a lot of debt to have run up in the space of just a couple of years - I appreciate that the pandemic has impacted a lot of folk really hard, but even then, that's a pretty steep figure to have arrived at. have the issues that arose out of the pandemic now been sorted so you're back on a properly even keel again? The SOA will clarify where savings might be able to be made on your outgoings anyway. 

    The issues with trying to do things without incurring defaults is that it's likely to mean interest continuing to rack up, which of course reduces the effects of the payments you make. I understand your point of view about wanting to apply for a mortgage, but realistically, how long will it take you to clear that level of debt just by making overpayments while interest continues to be added?

    Sort the SOA, and have a play with the snowball calculator which is linked in the sticky thread at the top of the board, too - that will confirm your timescales. 

    Remember - if you're looking at three years to clear, then an additional three to get things in good order, you might just as well go for the defaults ASAP - they should then hopefully be through inside 6 months, so not adding that much to your planned date for beginning to look at mortgages, but meaning that you will be debt free (and so in a position to begin saving for a deposit) that much sooner. 
    [font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]

    Household Information[/b]
    Number of adults in household........... 1
    Number of children in household......... 
    Number of cars owned.................... 1[b]

    Monthly Income Details[/b]
    Monthly income after tax................ 2600
    Partners monthly income after tax....... 0
    Benefits................................ 0
    Other income............................ 0[b]
    Total monthly income.................... 2600[/b][b]

    Monthly Expense Details[/b]
    Mortgage................................ 0
    Secured/HP loan repayments.............. 0
    Rent.................................... 695
    Management charge (leasehold property).. 0
    Council tax............................. 141.43
    Electricity............................. 125
    Gas..................................... 125
    Oil..................................... 0
    Water rates............................. 18
    Telephone (land line)................... 0
    Mobile phone............................ 0
    TV Licence.............................. 13.37
    Satellite/Cable TV...................... 0
    Internet Services....................... 38
    Groceries etc. ......................... 240
    Clothing................................ 0
    Petrol/diesel........................... 200
    Road tax................................ 27
    Car Insurance........................... 50
    Car maintenance (including MOT)......... 25
    Car parking............................. 0
    Other travel............................ 0
    Childcare/nursery....................... 0
    Other child related expenses............ 0
    Medical (prescriptions, dentist etc).... 0
    Pet insurance/vet bills................. 15
    Buildings insurance..................... 0
    Contents insurance...................... 0
    Life assurance ......................... 0
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 0
    Haircuts................................ 10
    Entertainment........................... 0
    Holiday................................. 0
    Emergency fund.......................... 0
    smoking................................. 170
    opticians............................... 15[b]
    Total monthly expenses.................. 1907.8[/b]
    [b]

    Assets[/b]
    Cash.................................... 0
    House value (Gross)..................... 0
    Shares and bonds........................ 800
    Car(s).................................. 5500
    Other assets............................ 0[b]
    Total Assets............................ 6300[/b]
    [b]
    No Secured nor Hire Purchase Debts[/b]

    [b]Unsecured Debts[/b]
    Description....................Debt......Monthly...APR
    HSBC...........................1900......0.........0
    Barclaycard....................390.08....40........23
    Aqua...........................1645......69.2......31
    Paypal.........................2574......114.......25.9
    Zopa...........................10213.2...307.......19.9
    Capital One....................717.93....50........30.34[b]
    Total unsecured debts..........17440.21..580.2.....-  [/b]

    [b]
    Monthly Budget Summary[/b]
    Total monthly income.................... 2,600
    Expenses (including HP & secured debts). 1,907.8
    Available for debt repayments........... 692.2
    Monthly UNsecured debt repayments....... 580.2[b]
    Amount left after debt repayments....... 112[/b]

    [b]Personal Balance Sheet Summary[/b]
    Total assets (things you own)........... 6,300
    Total HP & Secured debt................. -0
    Total Unsecured debt.................... -17,440.21[b]
    Net Assets.............................. -11,140.21[/b]

    [i]Created using the SOA calculator at www.LemonFool.co.uk.
    Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

    Please see my SOA attached - i will take a look at the snowball calculator also. 

    thanks for your help 
  • EssexHebridean
    EssexHebridean Posts: 24,202 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    edited 10 May 2022 at 1:37PM
    nobbyclarke123 said:
    EssexHebridean said:
    First step - SOA, there's a link in my signature which takes you straight to one of the calculators we recommend.

    That's a lot of debt to have run up in the space of just a couple of years - I appreciate that the pandemic has impacted a lot of folk really hard, but even then, that's a pretty steep figure to have arrived at. have the issues that arose out of the pandemic now been sorted so you're back on a properly even keel again? The SOA will clarify where savings might be able to be made on your outgoings anyway. 

    The issues with trying to do things without incurring defaults is that it's likely to mean interest continuing to rack up, which of course reduces the effects of the payments you make. I understand your point of view about wanting to apply for a mortgage, but realistically, how long will it take you to clear that level of debt just by making overpayments while interest continues to be added?

    Sort the SOA, and have a play with the snowball calculator which is linked in the sticky thread at the top of the board, too - that will confirm your timescales. 

    Remember - if you're looking at three years to clear, then an additional three to get things in good order, you might just as well go for the defaults ASAP - they should then hopefully be through inside 6 months, so not adding that much to your planned date for beginning to look at mortgages, but meaning that you will be debt free (and so in a position to begin saving for a deposit) that much sooner. 
    [font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]

    Household Information[/b]
    Number of adults in household........... 1
    Number of children in household......... 
    Number of cars owned.................... 1[b]

    Monthly Income Details[/b]
    Monthly income after tax................ 2600
    Partners monthly income after tax....... 0
    Benefits................................ 0
    Other income............................ 0[b]
    Total monthly income.................... 2600[/b][b]

    Monthly Expense Details[/b]
    Mortgage................................ 0
    Secured/HP loan repayments.............. 0
    Rent.................................... 695
    Management charge (leasehold property).. 0
    Council tax............................. 141.43 Single person discount applied here I assume?
    Electricity............................. 125 There might not be much you can do to reduce gas cost, but you may still be able to drive down the cost of the electricity you use - this is a lot more than we pay for electricity and we use it for everything aside from cooking, so I think there's room to make a difference here! 
    Gas..................................... 125
    Oil..................................... 0
    Water rates............................. 18
    Telephone (land line)................... 0 No landline AND no mobile? Unusual, but if it works for you...
    Mobile phone............................ 0
    TV Licence.............................. 13.37
    Satellite/Cable TV...................... 0
    Internet Services....................... 38 Shop around for this - you should be able to get cheaper.
    Groceries etc. ......................... 240 This is HIGH for a single person - I spend less than that feeding two of us" You can definitely knock £50 off as a starting point, and probably more. Maybe take a look at the Old Style board for inspiration! 
    Clothing................................ 0 Do you run around naked?! ;-) I'm guessing not, which means you need to set something aside in this category monthly so that when you need pants, socks or shoes the money is there ready. 
    Petrol/diesel........................... 200 
    Road tax................................ 27 If you pay this monthly then try to budget to buy annually when it's next due as there is a surcharge for paying by monthly DD.
    Car Insurance........................... 50 Assume you've done the price comparison thing here to make sure you're not overpaying?
    Car maintenance (including MOT)......... 25 I'd be surprised if this is enough, allowing that it looks like you do reasonably high mileage. Remember to think about everything you need to spend out for - servicing, MoT test, replacement tyres, wiper blades etc, cleaning costs, screenwash... 
    Car parking............................. 0 
    Other travel............................ 0
    Childcare/nursery....................... 0
    Other child related expenses............ 0
    Medical (prescriptions, dentist etc).... 0
    Pet insurance/vet bills................. 15
    Buildings insurance..................... 0
    Contents insurance...................... 0 Stop, do not pass go, go and get yourself some contents insurance! This one is urgent - seriously - sort it now, as a priority. And don't say "nothing worth stealing" either - there were residents of Grenfell tower who thought much the same, until they lost everything bar the clothes they stood up in... 
    Life assurance ......................... 0
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 0 You have nobody that you buy any form of present for at all? If you genuinely don't, then fair enough, but otherwise you need to budget here. 
    Haircuts................................ 10
    Entertainment........................... 0 Again - you never do anything at all that could be considered entertainment? Not a quick coffee while you're out and about, the odd magazine, a night at the pub with friends....nothing at all?
    Holiday................................. 0
    Emergency fund.......................... 0 Again, you need to start budgeting here. Start with looking to build a £500 fund as a minimum, but then continue to add to it so it continues to build. It's the thing that stops you reaching for a credit card when the SHTF
    smoking................................. 170 You already know the answer here, don't you? 
    opticians............................... 15[b]
    Total monthly expenses.................. 1907.8[/b]
    [b]

    Assets[/b]
    Cash.................................... 0
    House value (Gross)..................... 0
    Shares and bonds........................ 800
    Car(s).................................. 5500
    Other assets............................ 0[b]
    Total Assets............................ 6300[/b]
    [b]
    No Secured nor Hire Purchase Debts[/b]

    [b]Unsecured Debts[/b]
    Description....................Debt......Monthly...APR
    HSBC...........................1900......0.........0 How long is this at 0% for and how come you're not paying anything to it monthly?
    Barclaycard....................390.08....40........23
    Aqua...........................1645......69.2......31 Ouchy nasty rate - target this one first.
    Paypal.........................2574......114.......25.9
    Zopa...........................10213.2...307.......19.9
    Capital One....................717.93....50........30.34[b]...and this one second...
    Total unsecured debts..........17440.21..580.2.....-  [/b]

    [b]
    Monthly Budget Summary[/b]
    Total monthly income.................... 2,600
    Expenses (including HP & secured debts). 1,907.8
    Available for debt repayments........... 692.2
    Monthly UNsecured debt repayments....... 580.2[b]
    Amount left after debt repayments....... 112[/b]

    [b]Personal Balance Sheet Summary[/b]
    Total assets (things you own)........... 6,300
    Total HP & Secured debt................. -0
    Total Unsecured debt.................... -17,440.21[b]
    Net Assets.............................. -11,140.21[/b]

    [i]Created using the SOA calculator at www.LemonFool.co.uk.
    Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

    Please see my SOA attached - i will take a look at the snowball calculator also. 

    thanks for your help 
    Comments in bold above. I'm not going to give you a lecture on the smoking thing, there's no point, BUT I will say that if you gave up then you'd be looking at clearing your top two debts above in a year with NO other work done other than just the money saved from not buying cigarettes (or whatever) and the regular monthly payments. literally zero-effort debtbusting. You would also, of course, get a far better price on the life insurance that you will most likely need to get as and when you get that mortgage you're after, as well... 

    On the subject of that mortgage - things you need to do apart from paying off debt ahead of getting one include setting a realistic monthly budget and learning to stick to it, and building an emergency fund - and of course saving your deposit. I really would urge you to abandon the idea of trying to deal with clearing your debts without getting things defaulted - those interest rates mean that it's going to be a significant issue and a lot more time consuming done that way.

    The summary on the SOA is that yep, there are definite savings you could make - but there are also a fair few things in there you need to start budgeting for. I can't see that overall you're likely to reduce your outgoings that much.

    You were mentioning selling your car - how do you plan to cover the mileage that is currently costing you £200 a month in fuel without it though? It may be you have good public transport options for your commute, in which case, hunky dory, but for goodness sake don't believe "team green" and their statements that public transport is always cheaper - it's far from the case for many. 

    One last suggestion - I think you need to stop convincing yourself that the pandemic has caused your current situation because that's not the case, is it. If you were saying that because you thought people here would judge you - we have a rule here, DFW is for help,  not judgement - anyone getting judgy or sanctimonious will get told to butt out VERY fast. It honestly doesn't matter to anyone here - but you do need to accept that your debt is a far longer term situation than just the last couple of years - and being upfront about that will actually let others give you better advice and support, too. 
    🎉 MORTGAGE FREE (First time!) 30/09/2016 🎉 And now we go again…New mortgage taken 01/09/23 🏡
    Balance as at 01/09/23 = £115,000.00 Balance as at 31/12/23 = £112,000.00
    Balance as at 31/08/24 = £105,400.00 Balance as at 31/12/24 = £102,500.00
    £100k barrier broken 1/4/25
    SOA CALCULATOR (for DFW newbies): SOA Calculator
    she/her
  • sammyjammy
    sammyjammy Posts: 7,885 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    Did you take the loan from your employer?  Is that all paid off now?  

    https://forums.moneysavingexpert.com/discussion/6101745/iva-or-loan#latest

    "You've been reading SOS when it's just your clock reading 5:05 "
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