Possibility of getting a mortgage with a DMP

Isthisforreal99

The MSE deal finder is here if you want to play around with deposits etc - https://www.moneysavingexpert.com/mortgages/best-buys/

All subject to meeting lenders criteria and affordability - having zero debt will much improve your chances even with a lower deposit.

ACG

Im not trying to sway you (even if it may read like that). 

My personal view is that I would pull 5% of the balance out of the deposit. That would clear HALF of your debt. You can then consolidate if needs be and take out a loan at a high interest rate for £5k. and smash the other £5k down in no time. 

You then get a mortgage at normal rates (4.25%?)... £187k at normal rates (85% of £220k). 

The alternative is you get £22k on interest free (as part of the DMP), but you are going to be paying probably 6% on the other £180k (80% of £220k). 


I mentioned previously we see a lot of people with bad credit. You have had your wrists slapped no doubt by your Mrs. She has stuck with you. Your doing well. 

Your trying to do the right thing. But ultimately by doing that, your going to be signing your Mrs up to an adverse lender. You could do with speaking to a mortgage broker. Find out what rates are on offer on the high street and on the DMP. As there are so many factors - when do you want to buy? 12-18 months time is very different to 6 months time. 

Im not saying you are trying to be a martyr but the time for feeling bad has been and gone. Now is the time where you move forward. Your income is more, so you are contributing more towards the bills or will be once your back on top. Its not all one sided. Do the sums and work out what is best financially. Anything else is just dwelling in the past. 

(This is the proverbial kick up the backside to move forward, stop dwelling. There is no point crying over spilt milk as my nan used to say). 

born_again

I would investigate what you would lose cashing in the ISA & paying off the debts. 
At least then you are starting with a clean sheet & affordability would be better. 

If you default. Then you would be looking at going via a broker to see what there is on the market place in your situation.

Jimby509

I just called one of the Credit Card companies with £5700 balance and explained the situation.  They agreed a payment plan and to freeze interest without it effecting my credit rating.  So relieved I maybe able to do this without destroying my credit file.  Definitely good to be open with lenders

Isthisforreal99

Jimby509 said:

I just called one of the Credit Card companies with £5700 balance and explained the situation.  They agreed a payment plan and to freeze interest without it effecting my credit rating.  So relieved I maybe able to do this without destroying my credit file.  Definitely good to be open with lenders

Just keep an eye on your Credit File as front line staff have a habit of saying one thing and technically this should be treated as an Arrangement to Pay and a marker recorded on your credit file which is every bit as damaging as a default.

Not wanting to rain on your parade but take a note of your phone call in case if future problems.

ACG

Jimby509 said:

I just called one of the Credit Card companies with £5700 balance and explained the situation.  They agreed a payment plan and to freeze interest without it effecting my credit rating.  So relieved I maybe able to do this without destroying my credit file.  Definitely good to be open with lenders

See if you can get that in writing. 

jimjames

Rather than paying more into the LISA can you direct all that new money into paying down the debt? Avoids getting hit with penalties but another £4k will start to eat it on top of other payments.

Jimby509

born_again said:

I would investigate what you would lose cashing in the ISA & paying off the debts. 
At least then you are starting with a clean sheet & affordability would be better. 

If you default. Then you would be looking at going via a broker to see what there is on the market place in your situation.

So I would lose quite a bit.  If I deposit £4000 the government add £1000 making £5000, if I withdraw they will take £1250 leaving me with £3750 minus any interest paid (2%).  This still makes sense though if it pays off a high interest loan.

Jimby509

Isthisforreal99 said:

Jimby509 said:

I just called one of the Credit Card companies with £5700 balance and explained the situation.  They agreed a payment plan and to freeze interest without it effecting my credit rating.  So relieved I maybe able to do this without destroying my credit file.  Definitely good to be open with lenders

Just keep an eye on your Credit File as front line staff have a habit of saying one thing and technically this should be treated as an Arrangement to Pay and a marker recorded on your credit file which is every bit as damaging as a default.

Not wanting to rain on your parade but take a note of your phone call in case if future problems.

I was amazed when they offered the interest free.  I should get it in writing.  However she did say 3 times that there would be NO interest added.  Simply pay £90pm until it was paid off.  However if I missed a payment it would be recorded as a default.  I think they took it seriously as I mentioned mental health.  It changes everything though

Isthisforreal99

Jimby509 said:

Isthisforreal99 said:

Jimby509 said:

I just called one of the Credit Card companies with £5700 balance and explained the situation.  They agreed a payment plan and to freeze interest without it effecting my credit rating.  So relieved I maybe able to do this without destroying my credit file.  Definitely good to be open with lenders

Just keep an eye on your Credit File as front line staff have a habit of saying one thing and technically this should be treated as an Arrangement to Pay and a marker recorded on your credit file which is every bit as damaging as a default.

Not wanting to rain on your parade but take a note of your phone call in case if future problems.

I was amazed when they offered the interest free.  I should get it in writing.  However she did say 3 times that there would be NO interest added.  Simply pay £90pm until it was paid off.  However if I missed a payment it would be recorded as a default.  I think they took it seriously as I mentioned mental health.  It changes everything though

As I said earlier this is an arrangement to pay which although different to a default is equally damaging. Now we don't know exactly how the conversation went but if you asked if it would be recorded as a default and they said no, then they are correct, but it's only half the story.

Lenders are obliged to report the facts to the Credit Reference Agency and the facts here are that you have changed your contractual terms and made an Arrangement to Pay and they should report it as such.

You may have got lucky but keep an eye on your credit file.