Paying off DMP early

mjp18

Hi, 

I was wondering if anyone had any advice for me regarding paying off DMP early 

I had approx £10,000 of debt 5 years ago which I incurred whilst at university and set up a DMP with stepchange when my daughter was born. I had never missed a payment, but was aware that with having a child and paying childcare fees I wouldn't be able to keep up with payments so went ahead and entered a DMP so that I felt I had some control over my finances. Not helpful with my credit score, but I thought this was the most sensible option and better than burying my head in the sand. I had one credit card and one loan and stepchange have been brill with managing this. I would like to add that I already had a mortgage with my partner when I set this up. It now stands that I have £4726 left to pay on my DMP. All interest has been stopped.

In the last year I have had a promotion and stopped paying as much childcare due to my daughter starting school and have upped my monthly payments to the DMP, but it still isn't due to end until next September. I have recently had a lump some of money come my way which would pay the balance off in full and still have a bit left over for savings. 
In the mean time we are looking at moving house as we are relocating, we are meeting with a mortgage broker next week to see what the options are with my being in a DMP. My credit score isn't terrible at the moment, but also not great and my question is...would I be better paying the DMP off in full right now and having less money in the bank when applying for the mortgage, or trying to apply for the mortgage with a DMP currently in place and a larger sum of money in the bank. I understand that the markers on my credit report will stay on there for another year or so, regardless of whether I pay it off or not, but was wondering what the better option would be? 
Financially I'm in a lot better position than I was 5 years ago, I earn a lot more money and have no other debt (apart from mortgage with my husband)...no car on finance or anything like that and my affordability, even with the DMP is very good. 

Any advice would be very helpful. 

ArbitraryRandom

I've reported your thread to request the mods move it over to the 'debt free wannabe' board - some people on the housing board might have experience in this area but your best bet is over there. 

macman

Forget about your credit score, it's a fictitious number that lenders don't even see: What matters is your credit history.
A satisfied debt on your history will obviously look better than an outstanding one, but you will have £4.7k less for your deposit if you clear it. Is that amount going to be significant?

stymied

Have you read up about full and final offers on this board? There’s a chance you may be able to pay off early but at a slight discount if your debts have been sold on.

sourcrates

You could probably settle that £4726 for around half if you go about it the right way.

DCA`s are always offering settlement deals, you may want to do this yourself, look at "full and final settlement offers" on any of the advice sites.

mjp18

I was thinking about this, but do you think it would affect me applying for the mortgage, having a marker that said ‘partially settled’ rather than just paying it all off? 

fatbelly

I don't think it would make much difference.

It's having defaults that would cause the problems.

As the dmp started 5 years ago there should be defaults from that time. When they hit 6 years the whole entry disappears, settled, partially settled or not.

Make any offers using the ND standard letter

https://nationaldebtline.org/sample-letters/full-and-final-settlement-offer/

You may wish to test if any of them could be softened up first with cca requests - obviously that only works for debts covered by the Consumer Credit Act

https://nationaldebtline.org/sample-letters/information-about-your-agreement-under-consumer-credit-act/

mjp18

Ahh okay, that’s a good point. Thank you everyone for your help. So if I paid off in full it would stay on my credit history anyway until next year, regardless of whether I pay it off or not? 

Do you think the defaults will cause more problems than a partially settled payment marker? 

Thank you again, all very helpful.

fatbelly

That's right -  the default marker does not disappear just because you've paid it off.

You should really check all three reports to see what's on there - you may not have as many defaults as you think.