Seeking Advice on Mortgage Possibilities While on a DMP

adomingues

Hi everyone,

I’m reaching out to see if anyone has been in a similar situation to mine or has advice to share. My family and I are struggling to navigate the challenges of securing a mortgage while I’m currently on a Debt Management Plan (DMP) which I was badly advised to take. Here’s a summary of my situation:

• Background: I’m married with two young children (8 and 4 years old). In 2020, during the lockdown, just after my son was born, I entered a DMP due to financial difficulties (and bad advice). I’ve been keeping up with my payments, and most of the debts in the DMP are scheduled to be paid off between 2025 and 2026. However, my credit report still shows three defaulted debts and two ongoing debts managed under the DMP.

• Credit Report:
  Unfortunately, my credit report reflects the defaults and the DMP, which I’ve been told will remain until 2029, even after the debts are fully paid. A mortgage advisor I spoke to mentioned that it’s highly unlikely any lender would consider us for a mortgage for the next few years.

• Family Support:
  My parents have offered to help financially to clear the DMP sooner. I’m wondering if this would improve my credit report faster and potentially make a mortgage possible sooner.

• Why This Matters:
  Renting costs are soaring, and it feels like we’re throwing money away when we could be investing in a home. I want to do everything I can to provide stability for my family, but the current situation feels overwhelming.

Questions I’d Like Help With:

1. Has anyone successfully obtained a mortgage while on a DMP or shortly after clearing it?
2. If I pay off the DMP early (with my parents’ help), will that improve my credit score sooner, or will the defaults still prevent me from getting a mortgage until 2029?
3. Are there any lenders or brokers who specialise in helping people in similar situations?
4. Is there anything else I can do to make a mortgage possible sooner?

Any advice, personal experiences, or insights would be greatly appreciated. I’ve also contacted the DMP charity for guidance, but hearing from people who’ve been through this would mean a lot.

Thank you in advance for your support and advice!

Brie

Your credit score is meaningless as banks don't look at that.  They do look at your credit history.  

What would be the grounds of your parents giving you help?  Would it be an outright gift or a loan?  If it is a gift and you use that to clear your debts your credit history will look better than it does now.  The debts will still be visible but as time passes they will be less of an issue and will drop off your credit history after 6 years (England and Wales).  I would have thought that would be next year so not sure why you've been told 2029.  

The same would be true if your parents loan you the money but while you should declare the loan when applying for new credit (mortgage) their loan won't appear on your credit reports as individuals, unlike a card company, don't report this sort of thing.  

I think the mortgage adviser is right that your chances are not very good at this point but should improve in time.  While you are waiting this to happen make sure that there is nothing else negative on your credit history - no CCJs, not using your overdraft facility, not having other credit such as paying monthly for car/home insurance and phone contracts.  And that you and your other half are registered to vote.

Good luck with it - hope you get the home you're looking for!!

adomingues

Brie said:

Your credit score is meaningless as banks don't look at that.  They do look at your credit history.  

What would be the grounds of your parents giving you help?  Would it be an outright gift or a loan?  If it is a gift and you use that to clear your debts your credit history will look better than it does now.  The debts will still be visible but as time passes they will be less of an issue and will drop off your credit history after 6 years (England and Wales).  I would have thought that would be next year so not sure why you've been told 2029.  

The same would be true if your parents loan you the money but while you should declare the loan when applying for new credit (mortgage) their loan won't appear on your credit reports as individuals, unlike a card company, don't report this sort of thing.  

I think the mortgage adviser is right that your chances are not very good at this point but should improve in time.  While you are waiting this to happen make sure that there is nothing else negative on your credit history - no CCJs, not using your overdraft facility, not having other credit such as paying monthly for car/home insurance and phone contracts.  And that you and your other half are registered to vote.

Good luck with it - hope you get the home you're looking for!!

Thanks @BRIE for taking the time to respond and share your insights. Really appreciate it!

To answer your question, my parent’s help would be an outright gift, not a loan.

Regarding the defaults, I was told they would stay on my report for six years from the default date, which in my case ranges between 2023 and 2024. However, the DMP itself might be an issue even after the defaults disappear. That’s why I was told 2029, as that’s when my DMP was originally scheduled to end. If I clear it earlier, I was hoping this improves my chances sooner.

I checked, my credit history file has no CCJs, I am avoiding my overdraft so far. I will try to keep everything in good standing. My wife and I are both registered to vote as well.

Thanks again for your advice and support. it means a lot!