Mortgage questions and debt management plans

stevus_uk

I've recently completed a debt management plan, paying off close to £65k over the last 5 years, and I've been looking at the possibility of a mortgage rather than continuing to pay rent. I'm 53, so time is not on my side. I've got approx. £10k deposit available right now, and I started looking at mortgage options, but I am often faced with a question about whether I have been in a DMP on the last 6 years as a criteria before I can even consider applying. There's 2 questions I would like some advice about:

1. Am I under any obligation to declare that I was in a DMP?
2. Am I being unrealistic in trying to do this, as the approx costs look within what I could afford and are only a little over what I would be paying in rent (I'm also looking at completing the mortgage around my 67th birthday, when I would switch to retirement income, so the term would be 13-14 years).

I'm also challenging my credit scoring from Experian as several creditors (not all) show me in arrears or missing payments every month for the last few years despite never missing a single DMP payment, so as far as I'm concerned I paid what was agreed to by them.

Any advice would be most welcome. 😁

MWT

You will probably get more help on the credit score over on the 'Debt-Free' board, but I don't think you'll have much luck on getting the record changed as you did not pay according to the terms of the original credit agreement.

The DMP payments do not alter the fact that payment is late.

As to your first question, yes, if you do not answer accurately you are committing fraud.

Have you considered speaking to a mortgage broker that specialises in adverse cases?

stevus_uk

Thanks for the reply. Speaking to a specialist advisor would be my next step if I have to declare the DMP. 

And thanks also for the pointer on the credit score. It's strange (not entirely unexpected) that not all the creditors have marked the same, with one showing the payments were made with no default. I'll post on the other forum for advice. 

Thanks for taking the time.

Brie

The credit score itself is meaningless.  The banks never see it.  What is important is the credit history which quite rightly should show that you had payment arrangements with your creditors.  These may be reflected differently by different organisations but would likely show up marked as PA.  It may also mean when you look at your Experian report there is more yellow or possibly red on it than green.

It is very possible to get a mortgage after being on a DMP but I think you need to be a bit patient.  The more time that passes and puts the PAs into the background the more likely a bank is going to like you as a risk.  

stevus_uk

I recently completed my DMP and requested my credit report, and was partly surprised to see credit history that suggests defaults from a number of creditors that were paid under the DMP. However, one of these creditors shows no default which confused me. The way I see it is that although I did default on the original agreement, the creditors agreed to a revised payment plan which I kept to and never missed, so I have approached the creditors through Experian to request the scoring is revised. 

Do I have any chance the history or scoring will be adjusted? I've set the ball in motion anyway, but I wondered if I am wasting my time? 

Oddly enough, while I was still paying the DMP, my overall credit score was higher than it is now after completion, presumably because the accounts were closed and I therefore don't have any credit agreements. Can anyone explain this as well (rather than me assuming)?

stevus_uk

Thanks @Brie. I had considered that and wondered about trying to save what I would expect to pay on a mortgage (minus rent) for a year or so to increase my deposit to improve my chances. 

And to correct my statement, it's the credit history I am disputing with Experian 👍

Brie

I'll ask for the two threads to be merged.

Mortgage questions and debt management plans — MoneySavingExpert Forum

Sly72

Thats what happens, defaults are better

ACG

1) It depends on the question asked, but where it is asked, yes you are legally obliged to declare it. 
2) No, but you probably need 15% deposit. 

fatbelly

A default means that you have failed to maintain your contractual payment. That is pretty much the definition of a debt management plan. The alternative mark is arrangement to pay. 

The former means the whole entry disappears after 6 years. The latter stays till 6 years after the debt is cleared, which is very different.

enthusiasticsaver

This is why we always recommend defaulting rather than payment arrangements because as @fatbelly says the AP markers stay on the file 6 years after the debt repaid. Defaults drop off 6 years after the default date.