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  • FIRST POST
    • eyhorne
    • By eyhorne 10th Mar 18, 2:04 PM
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    eyhorne
    Can I get a mortgage while on a DMP?
    • #1
    • 10th Mar 18, 2:04 PM
    Can I get a mortgage while on a DMP? 10th Mar 18 at 2:04 PM
    Hi - my friend has just been put on a DMP but is struggling to pay her rent in a HA property (£700) - rental through private landlords in her area for similar properties is £900 so she would like to be able to buy a small place which would mean the mortgage would be much less a month.
    Is there any chance at all that should could get a mortgage - she is in a steady job (11 years) and is paid monthly.
    She was advised by the CAB that she should go part time as that would allow her access to more financial help - she is able to get food bags from Nourish weekly at present but not much else. She is a single mum with 16 years old - ex partner's debts have got her where she is now unfortunately.
Page 1
    • ACG
    • By ACG 10th Mar 18, 2:12 PM
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    ACG
    • #2
    • 10th Mar 18, 2:12 PM
    • #2
    • 10th Mar 18, 2:12 PM
    It would depend on how everything appears on her credit report.
    It is potentially possible, but it will not be at "normal" rates (circa 4%) and she would need probably a 15% deposit.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • Tarambor
    • By Tarambor 10th Mar 18, 2:38 PM
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    Tarambor
    • #3
    • 10th Mar 18, 2:38 PM
    • #3
    • 10th Mar 18, 2:38 PM
    Hi - my friend has just been put on a DMP but is struggling to pay her rent in a HA property (£700) - rental through private landlords in her area for similar properties is £900 so she would like to be able to buy a small place which would mean the mortgage would be much less a month.
    Is there any chance at all that should could get a mortgage - she is in a steady job (11 years) and is paid monthly.
    Originally posted by eyhorne
    Not a chance. Even if she wasn't in a DMP and had excellent credit if she's struggling to pay rent on a HA property she would fail affordability tests. Also the mortgage isn't the only cost you have when you buy a house - the total cost of ownership of a house in the lower end of the market is usually around that of rent of council houses or housing association houses.

    Also where would she magic up £20k or more for the deposit and fees? You're looking typically at at least a couple of grand just in fees.
    • ACG
    • By ACG 10th Mar 18, 4:53 PM
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    ACG
    • #4
    • 10th Mar 18, 4:53 PM
    • #4
    • 10th Mar 18, 4:53 PM
    Not a chance. Even if she wasn't in a DMP and had excellent credit if she's struggling to pay rent on a HA property she would fail affordability tests. Also the mortgage isn't the only cost you have when you buy a house - the total cost of ownership of a house in the lower end of the market is usually around that of rent of council houses or housing association houses.

    Also where would she magic up £20k or more for the deposit and fees? You're looking typically at at least a couple of grand just in fees.
    Originally posted by Tarambor
    I think you are looking at it too simplistically.

    I used to rent, it cost me £750 a month.
    I bought a house and the Mortgage was £350 a month - even if the rate had been around 7%, it would have been less than £750 a month.

    It is now more often than not cheaper to own than it is to rent, that takes in to account keeping on top of things.

    The deposit may be a gift from parents?

    So rather than say it can not be done based on limited information it might be better to ask questions to help you give an answer or at least play devils advocate and give an answer that is not biased one way or the other.

    ...Just my thinking.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • John-K
    • By John-K 11th Mar 18, 7:29 PM
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    John-K
    • #5
    • 11th Mar 18, 7:29 PM
    • #5
    • 11th Mar 18, 7:29 PM
    Any bank ,ending to someone in this situation should be hauled over the coals by the regulator.

    It is like 2008 never happened.
    • sourcrates
    • By sourcrates 11th Mar 18, 10:05 PM
    • 14,311 Posts
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    sourcrates
    • #6
    • 11th Mar 18, 10:05 PM
    • #6
    • 11th Mar 18, 10:05 PM
    Mortgage lenders have tightened lending criteria in recent years, affordability is everything these days, the negative information due to her been on a DMP will go against her I am afraid.

    She could try a broker, that would be her best bet to be accepted.
    Last edited by sourcrates; 12-03-2018 at 2:09 PM.
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    • Tarambor
    • By Tarambor 12th Mar 18, 2:39 AM
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    Tarambor
    • #7
    • 12th Mar 18, 2:39 AM
    • #7
    • 12th Mar 18, 2:39 AM
    I think you are looking at it too simplistically.
    Originally posted by ACG
    Really I'm not.
    I used to rent, it cost me £750 a month.
    I bought a house and the Mortgage was £350 a month - even if the rate had been around 7%, it would have been less than £750 a month.
    And in my town I can rent a house for £2500 a month or rent one identical to mine for £500 a month which is just £70 more than my mortgage. A housing association house rental is at the lower end of the market, not much more than mortgage repayments on a cheap house. The OP even posted that the HA rent is £200, almost 25% lower than private rents.
    It is now more often than not cheaper to own than it is to rent, that takes in to account keeping on top of things.
    Not at the lower end of the rental market and when you factor in everything including the buying costs and all the things landlords pay for.
    So rather than say it can not be done based on limited information it might be better to ask questions to help you give an answer or at least play devils advocate and give an answer that is not biased one way or the other.
    They're on a DMP, they can't afford rent on a house that is almost 25% lower than the market average for a house in their area, they're not getting a mortgage, they will fail a mandatory affordability test. It isn't a biased answer, it is the truth.
    Last edited by Tarambor; 12-03-2018 at 2:42 AM.
    • Brock_and_Roll
    • By Brock_and_Roll 12th Mar 18, 9:23 AM
    • 836 Posts
    • 815 Thanks
    Brock_and_Roll
    • #8
    • 12th Mar 18, 9:23 AM
    • #8
    • 12th Mar 18, 9:23 AM
    Any bank ,ending to someone in this situation should be hauled over the coals by the regulator.

    It is like 2008 never happened.
    Originally posted by John-K



    Absolutely!


    I would walk out of my employer if they lent in such circumstances, however, depressing the wall of cheap money and a decade of low interest rates means that brokers may be able to find someone to lend - does not make it a good idea though!
    • ACG
    • By ACG 12th Mar 18, 1:43 PM
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    ACG
    • #9
    • 12th Mar 18, 1:43 PM
    • #9
    • 12th Mar 18, 1:43 PM
    they will fail a mandatory affordability test. It isn't a biased answer, it is the truth.
    Originally posted by Tarambor
    I must have missed the post that confirmed their income, expenditure and the Mortgage they want.

    I would love to know how you know they will fail an affordability test. I do this sort of thing on a daily basis and with the only information to go off being that they are struggling to pay rent does in no way help me work out whether or not they will pass affordability.

    The rent may be 25% lower than anything else out there, but it does not mean that a Mortgage would not be less again.
    In terms of initial costs, aside from the deposit - those costs could be £0. Free val and legals are available.

    You are making assumptions which does not help the OP.

    You could be 100% spot on, but you could be far from the mark.


    Unless you know their income, their expenditure and the size of the Mortgage they are after, the "truth" as you put it, is that you have absolutely no idea.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • Tarambor
    • By Tarambor 12th Mar 18, 2:26 PM
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    Tarambor
    I must have missed the post that confirmed their income, expenditure and the Mortgage they want.

    I would love to know how you know they will fail an affordability test.
    Originally posted by ACG
    It is in the original post. They're struggling to pay housing association rent and they're in a DMP.

    The rent may be 25% lower than anything else out there, but it does not mean that a Mortgage would not be less again.
    It is irrelevant what the mortgage would be today, the affordability test is done with interest rates at 6-7%, not 2-3%. Housing association rents tend to be fairly in line with mortgage repayments.

    Unless you know their income, their expenditure and the size of the Mortgage they are after, the "truth" as you put it, is that you have absolutely no idea.
    They're in a DMP, they have no money saved up, they're struggling to pay their rent. If you think that they could get a mortgage then it would appear it is you who doesn't have a clue. Given you claim "to do this sort of thing on a daily basis" I can only come to the conclusion if you work for a broker, estate agent or financial institution you work for one of those scummy sub-prime lenders who don't give a toss.
    • John-K
    • By John-K 12th Mar 18, 9:42 PM
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    John-K
    I must have missed the post that confirmed their income, expenditure and the Mortgage they want.
    .
    Originally posted by ACG
    It’s a virtual certainty, given the facts that they posted. Do you honestly believe, with the numbers given, that it was wrong to mak the very sensible conclusion that you seem so upset by?
    • adindas
    • By adindas 12th Mar 18, 11:16 PM
    • 3,548 Posts
    • 2,200 Thanks
    adindas
    I echo the other posters.

    In this circumstances, DMP, strugling to pay the rent of £700. The chance of getting mortgage is next to none. But people do win a lottery, do not they. So they could always try their luck.

    If the argument is just because the montly payment of the mortgage is likeky to be the same with renting, it will also mean, anyone currently living on benefit where the rent is higer than the mortgage monthly payment could also get a mortgage ?
    Last edited by adindas; 13-03-2018 at 8:52 AM.
    • ACG
    • By ACG 13th Mar 18, 10:10 AM
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    ACG
    I know what lenders assess repayments on.

    £700 rent is one thing.
    An £80k Mortgage at 7% over 35 years is a little over £500 a month. So near enough £200 a month less, however in the real world it could be as low as £400 a month with the adverse, meaning our OP could in 2 years be £6-7k better off.

    So again, I refer back to the point of you have no actual figures to work from. I am not saying you are wrong, I am just saying it is like doing an equation with no numbers.

    Can you not have a conversation without trying to sling mud? Ridiculous. Grow up. Without knowing me or us as a company it is a little unreasonable to start calling names.

    We have no targets, all of our customers have access to their advisor and me. We vet our customers to ensure we are a good fit for one another, ie we do not take on business because we need to - we are successful and have no need or wants to be placing business that would put the customer in a worse position. I like sleeping at night and would not do that knowing I am putting people on a ticking timebomb.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • ACG
    • By ACG 13th Mar 18, 10:14 AM
    • 17,025 Posts
    • 8,916 Thanks
    ACG
    It’s a virtual certainty, given the facts that they posted. Do you honestly believe, with the numbers given, that it was wrong to mak the very sensible conclusion that you seem so upset by?
    Originally posted by John-K
    This is my point, there are not enough numbers.
    I am not upset by anything. I am very open to the fact I could be wrong/everyone else is right. All I am saying is that there is not enough information to give a definitive answer. By telling someone something can not be done, the OP may just knock it on the head.

    I am not one for analogies as they are always wide of the mark, but think about that person who went on dragons den with those kids cases on wheels and was told to forget it. He is now a multi millionaire.

    All I am saying is that we need more information or go and speak to someone who will take in to account all of the information and give them an informed decision.

    The mortgage (even at 7%) could be significantly less than rent. The deposit could be a gift. But we do not know.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • Tarambor
    • By Tarambor 13th Mar 18, 5:16 PM
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    • 2,194 Thanks
    Tarambor
    I know what lenders assess repayments on.

    £700 rent is one thing.
    Originally posted by ACG
    Quite clearly you don't then given that they disregard what rent you're currently paying as you'll not be renting any more when you buy.
    [quote]
    An £80k Mortgage at 7% over 35 years is a little over £500 a month. So near enough £200 a month less, however in the real world it could be as low as £400 a month with the adverse, meaning our OP could in 2 years be £6-7k better off.

    If they're paying £700 a month in housing association rent they're not living in an area where they can buy a house for £85-90k or even £100k are they?

    As for the £200 a month less......

    Subtract £15 a month for gas appliance cover, £15 a month for life insurance for the mortgage, £20-£30 a month for buildings and contents insurance. Given how tight their finances are currently if something were to happen and a repair came up which had to be done, how are they going to fund it?
    • ACG
    • By ACG 13th Mar 18, 5:42 PM
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    ACG
    If they're paying £700 a month in housing association rent they're not living in an area where they can buy a house for £85-90k or even £100k are they?
    I have no idea and neither do you. Yet another assumption you have made.


    As for the £200 a month less......

    Subtract £15 a month for gas appliance cover (I do not have this), £15 a month for life insurance for the mortgage (not a requirement), £20-£30 a month for buildings and contents insurance (only buildings insurance is a requirement and I am sure the price comparison sites can do it for less than £20 a month). Given how tight their finances are currently if something were to happen and a repair came up which had to be done, how are they going to fund it?
    With the £200 a month they are saving on the rent? (That I have for the sake of this thread, assumed they could be saving).

    I think I need to bow out of this conversation as we are debating about something that neither of us know enough about.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
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