Can I get another mortgage if I am on a DMP?

KITT2000

Hi. right, so I have a dilemma about what to do which I will try to keep brief and to the point...
I am 51 years old and live on my own in a small 2-bedroom terraced house, my mortgage is £300 per month and have over £55k left to pay on it over the next 18 years. I am currently on a 5-year fixed deal which ends in 2 years and then I will need to speak to my mortgage broker to try and get my property remortgaged at hopefully a reasonable interest rate which I am not looking forward to due to the high interest rates at the moment.

Over the last 6 years, I have accumulated credit card debts due to legal issues and general day-to-day living including shopping, petrol, and birthday presents for mainly my children although I try not to spend too much, just finding that balance of not too much and not too little. The debt I have built up is on a total of 5 different cards to the value of £18,000. Even though I tried the method of using 0% balance transfer cards it got to a point where I was not able to get any more cards even though my credit score is quite high and am now incurring interest on them all, some are almost as much as the minimum payment. My income is moderately low (approx £1500 net per month). My other biggest expenditure which is more than my mortgage is child maintenance which is almost £400 for 3 children. Add all of this with council tax, water, gas, electric, car/home/life insurance, and various other direct debits I am left with very little, if at all anything and I am often in my £500 overdraft limit. It is a constant struggle and just feels like I am trying to dig out of a sandpit but the sand keeps falling back in on me.

I have spoken to my mortgage broker about my financial situation who suggested that I apply to my mortgage lender (Natwest) for an advance of say about £18k which I will use to pay off my credit cards. On doing that I was not successful as I did not pass the affordability test even though I have a good credit score as I have never missed any payments (although I have come very close to doing so in the past).

Option 2 was to try and get a 2nd charge mortgage so I was put in touch with a company that specializes in that but after many attempts of them trying I was still not able to get the funds due to the affordability of my income and outgoings.

I then tried to see if I could get a personal loan from either my bank or the post office for a smaller amount (£15k) but again I was declined due to affordability factors. I then went online to Stepchange and filled out the SOA to see what my options would be, the main one being I go a DMP which I would be happy to do if it meant I could finally be rid of my debts.

Having spoken to my mortgage advisor about this option he strongly advised me not to go onto a DMP as this could seriously jeopardize my chances of obtaining another mortgage when it is up for renewal in a couple of years' time which I obviously do not want to happen as what would I am be able to do if I couldn't get a mortgage? It scares me to even think about that.

Does anybody have any ideas of what I should do and should I take the risk of going on a DMP and see what happens? I am happy to fill out a SOA and post it here if it helps.

Grumpelstiltskin

Please fill in your  SOA and post it on here. 

Make sure it is honest and include interest rates on the debts.

Never turn unsecured debts into a secured debt - mortgage.

You can't borrow to clear debts, all it does it move the debt sideways.

Don't rush into a DMP until you have got more information from the good people on here.

KITT2000

Household Information[/b]

Number of adults in household........... 1

Number of children in household......... 0

Number of cars owned.................... 1[b]

Monthly Income Details[/b]

Monthly income after tax................ 1500

Partners monthly income after tax....... 0

Benefits................................ 0

Other income............................ 0[b]

Total monthly income.................... 1500[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 292

Secured/HP loan repayments.............. 0

Rent.................................... 0

Management charge (leasehold property).. 0

Council tax............................. 153

Electricity............................. 60

Gas..................................... 60

Oil..................................... 0

Water rates............................. 46

Telephone (land line)................... 15

Mobile phone............................ 18.99

TV Licence.............................. 13.25

Satellite/Cable TV...................... 30

Internet Services....................... 10.95

Groceries etc. ......................... 150

Clothing................................ 0

Petrol/diesel........................... 80

Road tax................................ 15

Car Insurance........................... 24

Car maintenance (including MOT)......... 15

Car parking............................. 0

Other travel............................ 0

Childcare/nursery....................... 0

Other child related expenses............ 392

Medical (prescriptions, dentist etc).... 29.16

Pet insurance/vet bills................. 4

Buildings insurance..................... 4.8

Contents insurance...................... 3.5

Life assurance ......................... 8

Other insurance......................... 16

Presents (birthday, christmas etc)...... 50

Haircuts................................ 0

Entertainment........................... 0

Holiday................................. 0

Emergency fund.......................... 0

Personal Pension........................ 35[b]

Total monthly expenses.................. 1525.65[/b]

[b]

Assets[/b]

Cash.................................... 0

House value (Gross)..................... 195000

Shares and bonds........................ 0

Car(s).................................. 400

Other assets............................ 0[b]

Total Assets............................ 195400[/b]

[b]

Secured & HP Debts[/b]

Description....................Debt......Monthly...APR

Mortgage...................... 55256....(292)......1.74[b]

Total secured & HP debts...... 55256.....-.........-   [/b]

[b]Unsecured Debts[/b]

Description....................Debt......Monthly...APR

Sainsbury's Bank...............8453......265.......27.2

Tesco Bank.....................4349......70........18.7

Virgin Money...................2042......58........21.6

Capital One....................926.......29........22.4

HSBC...........................1896......49........21.9[b]

Total unsecured debts..........17666.....471.......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 1,500

Expenses (including HP & secured debts). 1,525.65

Available for debt repayments........... -25.65

Monthly UNsecured debt repayments....... 471[b]

Amount short for making debt repayments. -496.65[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 195,400

Total HP & Secured debt................. -55,256

Total Unsecured debt.................... -17,666[b]

Net Assets.............................. 122,478[/b]

[i]Created using the SOA calculator at www.LemonFool.co.uk.

Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

Grumpelstiltskin

A couple of quick thoughts.

Do you claim single persons Council Tax discount?

Is your water metered?

sammyjammy

Your future self will thank those organisations for not lending you more money. in the short term I would recommend you stop paying towards these unsecured debts, you are just getting deeper and deeper into debt, don't worry about the mortgage 2 years from now, chances are you can move to a new fixed rate with your current lender without a credit check.  Take some time to save an emergency fund and then start a DMP if SOA allows.

Martico

Your outgoings are higher than your income even before non-priority debt payments are taken into account, and that's something that you have to get straight. With a relatively low income, some of those expenditures will need to be cut or some extra income will need to be found.

As above, that water bill is insanely high for a one-person household. Cutting the satellite TV and landline phone expenses would bring a little respite. And with those three you may be able to get to a place where your budget (excluding CC repayments) enables you to have a little left over each month. 

With the mortgage cost likely to increase in a couple of years, you'll need it. People here have reported that gaining a new fixed rate with the same provider as your current one is not normally an issue for those on a DMP. 

But by the look of it, a DMP, some cuts in an already tight budget and efforts to earn a little more money, even if it's a few quid here and there through bar work or online surveys may be your only realistic option.   

fatbelly

Council tax seems high for a single adult. Are you getting your 25% discount? Are you paying over 12 months?

Please stop trying to move nonpriority debt on to your house. That could be a disaster.

Also do not get debt advice from a mortgage adviser. Please read this. I'll be back later

https://debtcamel.co.uk/new-mortgage-fixed-rate-poor-credit/

Rob5342

Martico said:

People here have reported that gaining a new fixed rate with the same provider as your current one is not normally an issue for those on a DMP.

When your fixed rate ends you can normally switch to another of your lenders fixed rates without a credit check. I have 3 defaults on my credit report and I got a 7 year 2.34% fix with no problems at all, it took about two minutes to log on to internet banking and choose it. (7 years is quite a long time but I knew I had another default coming and wanted that to drop off before the fix ended)

KITT2000

Grumpelstiltskin said:

A couple of quick thoughts.

Do you claim single persons Council Tax discount?

Is your water metered?

Hi. Although I have stated that I am single and living alone which I was until very recently, my partner moved in with me not so long ago but as she is self-sufficient and has her own debts to pay I don't have additional income hence why I am obviously not able to claim single persons discount on my council tax.

Yes my water is metered

Grumpelstiltskin

KITT2000 said:

Grumpelstiltskin said:

A couple of quick thoughts.

Do you claim single persons Council Tax discount?

Is your water metered?

Hi. Although I have stated that I am single and living alone which I was until very recently, my partner moved in with me not so long ago but as she is self-sufficient and has her own debts to pay I don't have additional income hence why I am obviously not able to claim single persons discount on my council tax.

Yes my water is metered

OK So does your partner pay anything towards Council Tax, utilities, food etc, surely she is not living with you and paying nothing towards the household expenses?

KITT2000

I hate to say it but she pretty much lives with me for free apart from buying the occasional shopping, the thing is that she is paying for a mortgage as well as she has a house overseas and is having work done to it as it is a new build, so, unfortunately, she doesn't have much spare to help me out.