While some mortgage lenders may consider a Debt Management Plan (DMP) to be a red flag, there are plenty of mortgage providers out there who will be willing to offer you a home loan if you can prove that your debts are under control and you will be able to cover your repayments comfortably.
The challenges lie in finding the right company to begin with, then making sure you submit an application that meets their criteria and strengthens your case.
Here’s a little more information on what you can expect from the mortgaging process if you have, or have had, a DMP and how working with CLS Money can maximise your chances of getting a competitive deal in place ready for your move.
Things to consider when moving between properties
A home mover is someone who already has a mortgaged or owned home and is moving into a new property. As a home mover, you can choose to ‘port’ your mortgage with your existing lender or apply for a mortgage with a different provider. Your mortgage broker will be able to advise you on the best option, based on your repayment history and the terms of your current agreement.
As a home mover, you are likely to have some general knowledge when it comes to finding the right mortgage and dealing with brokers. Whilst costs are important to you, you’re focusing on other factors for your move, such as achieving new lifestyle goals; upsizing to meet the demands of your growing family, or changing location due to work or family commitments.
You’re in a much stronger position than a first-time buyer because you have evidence of your ability to pay your mortgage repayments in full and on time, every month. This will put you in a favourable position when it comes to getting a good interest rate. You’re also likely to have built up some equity in your existing property, meaning you’ll be entering into a new agreement with a better loan-to-value (LTV) than before.
One of the most common problems that home movers experience is being stuck in a chain. This is the term used for a sequence of linked home purchases who are reliant on each other for the preceding and succeeding purchases; for example, those buying your house are reliant on you completing on your new home in order to move into your old one.
It’s important to stay in contact with your solicitor throughout the moving process to ensure everyone is kept up to date with potential move dates and any delays are communicated up and down the chain.
How will having 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.
While a DMP can be a great option to help you get out of a bad financial situation, you may struggle to get a mortgage if you have been on a DMP within the last six years. Having a Debt Management Plan indicates to potential mortgage 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 (even if you’ve had a mortgage in the past with no problems).
It’s not all bad news, though. There are many specialist lenders on the market who will take a holistic view of someone’s financial situation and consider them for a mortgage regardless of a previous Debt Management Plan.
As specialist brokers, we have huge amounts of experience working with clients like you who have DMPs on their credit file. We can partner you with 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?
Getting in touch with our team couldn’t be easier. You can call us or contact CLS Money online to get the ball rolling and arrange your free consultation. We offer plenty of appointments during the evenings and at weekends, so you won’t need to take time out of your day to speak with us – and we guarantee you’ll receive honest, expert advice from brokers with plenty of experience in handling cases like yours.
And because we can access the whole of the market, we’ll often be able to track down deals from specialist or niche providers that are in a position to offer better rates and terms to customers with DMPs.
We're here to help with any mortgage advice you need
We're not just here to handle your DMP mortgage problems; we're here to help where the high street lenders don't or can't. As one of the leading mortgage brokers in our area, we're here to help with everything from a poor credit report to filling out your mortgage application.
The team at CLS are ready and waiting to answer questions about all of the following and more:
Mortgage deals for those with a poor credit report or credit history
Finding specialist lenders for unique circumstances and situations
Bad credit mortgages
Managing your monthly payments
Mortgage advice for self-employed, company directors, and professionals
Handling mortgage arrears
What to do about late payments and missed payments
Finding a mortgage with adverse credit problems
Arranging a mortgage when you owe money for other debts