Buy to Let with a Debt Management Plan (DMP)
Don’t let being on a Debt Management Plan (DMP) stop you from following your investment dreams!
Yes, getting great Buy to Let mortgage rates can be more challenging if you’re still paying back debt elsewhere. However, plenty of lenders out there will be happy to offer you finance despite your credit issues as long as you meet their other standard eligibility criteria. In many instances, your affordability can be more important than your credit history, as well as whether your expected rental income will cover your repayments (and then some).
What to consider when applying for a Buy to Let mortgage
A Buy to Let (BTL) mortgage is designed for people who are looking to purchase additional property and rent it out in order to make a profit on their initial investment. In the UK, there are no limits on how many properties one person can own – so as long as you understand your responsibilities and duties as a landlord, it can be an incredibly lucrative way to generate capital.
When looking for a Buy to Let mortgage, price is a very important factor, as it will directly affect the viability of your investment. When working out how much you can afford, you will need to consider how much you will need to set aside for the payments on your residential mortgage (if you have one), as well as any other financial commitments that could affect your ability to keep on top of your BTL mortgage repayments.
Remember, too, that Buy to Let deposits are significantly larger than those for a standard residential mortgage. You will usually need a bigger down payment to not only secure a mortgage in the first place but access the most competitive rates.
Buy to Let mortgages have been notoriously difficult to obtain in the past due to stringent income and affordability checks, not to mention volatile markets. For the best chance of success, it’s important to explore all your available options before making a decision on which lender to use.
How will a DMP affect your BTL mortgage application?
A Debt Management Plan, or DMP, is an informal agreement between you and your creditors that specifies you will pay back any non-priority debt that’s owed to them.
Usually, you will arrange to pay the debt back in one set monthly sum, which will be divided between your creditors.
Whilst a DMP can be a great option to help you get out of a bad financial situation, if you have been on a DMP within the last six years, leaving a record of adverse credit, and you may struggle to get a Buy to Let mortgage. Having a DMP on your credit report indicates to potential lenders that you have had difficulty making repayments in the past, leading them to believe that you’re simply too high risk to take on as a customer.
Specialist DMP mortgage lenders
It’s not all bad news, though. Although high street lenders will generally strike all applications with a bad cred rating, there are plenty of specialist mortgage lenders who will take a holistic view of someone’s financial situation and consider them for a mortgage regardless of a previous Debt Management Plan. A poor credit rating doesn't mean the end of the road if you're looking to get a mortgage, and as a specialist broker who deals with DMP mortgage lenders every day, we're here to help whatever your credit scores look like.
Our specialist BTL mortgage brokers have huge amounts of experience working with clients who have a Debt Management Plan on their credit file. We can introduce you to the right lenders who are more likely to accept you for a mortgage, thereby giving you the best possible chance of finding a deal that is affordable and well-suited to your personal circumstances.
Why use a mortgage broker?
You’ve probably got lots of questions for our advisers – and we’d love to help! To discuss your needs, explore your options and get a series of free, no-obligation quotes from suitable lenders, book a consultation with one of our Buy to Let mortgage brokers today.
Here at CLS, we work with borrowers of all kinds – matching specialist lenders to those with a poor credit record, complex incomes, and all kinds of other unusual situations. We're experts in bad credit mortgages, showing customers that managing their debt repayments can get them back on track, even helping them land a mortgage with a DMP on their record.
With expert mortgage advice, we’ll guide you through the entire mortgage process, from choosing the right product with managable monthly payments, to liaising with your preferred provider to make a fast decision regarding your new mortgage.
Work with us, and there will be no fuss, no jargon, and no confusion – just expert advice and proactive assistance from people who have helped countless other people in your position take back control of their financial future and enjoy all the benefits of becoming a Buy to Let landlord.