First-Time Buyer with a Debt Management Plan (DMP)
Most of us have lived with a little debt in the past. But if you have had to enter into a Debt Management Plan (DMP), or you are still paying off what you owe as part of this kind of agreement, you may find that many mortgage companies are less likely to lend to you.
The trick is to find a niche or more specialist lender who will consider your case, with the help of a broker who has extensive experience in handling applications on behalf of first-time buyers with a DMP in place.
Things to consider as a first-time buyer
Lenders define a first-time buyer as someone purchasing a property who has never owned a home previously.
If you’re a first-time buyer, you might not fully understand the mortgage process, so it can be really helpful to speak to an expert to talk you through it. He or she will explain all the key terminology and help you work out how much your monthly repayments will be, as well as how much the mortgage will cost you over the course of your full term.
One key thing to ensure from the start is that you have all the right documents to hand. Any errors, inconsistencies or omissions from your paperwork could be a red flag to your lender and could put you in a poor position when it comes to being accepted for a mortgage.
As a first time buyer, you might not have a strong credit history. Chances are you’ve never had to pay back this kind of debt before. From the lender’s perspective, taking you on as a mortgage customer is a bit of a gamble because they have no examples of your reliability as a debtor. This is why it’s so important to use a mortgage broker when looking to apply for a first-time buyer mortgage. Their expertise will help you meet lender criteria, which in turn will give you a better chance of being accepted for a mortgage and securing your dream home.
How will a Debt Management Plan affect your chances of getting a mortgage?
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 Debt Management Plan 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, you may struggle to get a mortgage. Having a DMP indicates to potential lenders that you have had difficulty making repayments in the past, leading them to believe that you’re simply too high a risk to take on as a customer. Add this to your perceived volatility as a first-time buyer, and your options may be even more limited.
It’s not all bad news, though. There are a number of mortgage lenders on the market who will take a holistic view of someone’s financial situation and consider them for a mortgage regardless of an active or previous DMP.
As specialist mortgage brokers, we have masses of experience working with clients like you who have DMPs on their credit file. We can introduce you to specialist mortgage lenders who are more likely to accept your mortgage application, 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?
At CLS Money, we regularly help first time buyers take their first steps onto the property ladder – even those who are still paying off a DMP or have done so in the past.
Because we can search the whole of the market for the right deal, we can provide far better options than the usual high street lenders. We track down attractive offers from companies that have granted loans to people in similar situations to yours, matching specialist lenders to borrowers with a poor credit report or struggling to meet their monthly payments.
When you work with us, you’ll have someone by your side throughout the entire application process to help you collect your documents together and liaise with the lender prior to completion.
Mortgage advice for every eventuality and unique situation
We've helped plenty of first-time buyers find a mortgage despite suffering a debt management plan, but that's not all. As a specialist mortgage broker, we've helped borrowers with adverse credit, non-priority debt, those with mortgage arrears, payday loans, or who have made late payments causing problems with their existing lenders.
For questions about the following or anything else, our team has professional advice for whatever you need:
- How to lower your monthly payment
- Bad credit mortgages
- Mortgage deals for self-employed, company directors, and professionals
- Finding options with preferable interest rates
- New mortgage applications
- Specialist mortgages for borrowers who owe money or have adverse credit issues
- IVA mortgages (individual voluntary arrangement)
- Dealing with a mortgage and payday loans
- Replacing your existing lender
- Finding a better mortgage deal
- Boosting your lending criteria
To discuss your options in more detail, and to get a free, no-obligation quote from one of our expert brokers, contact us today.