Can you Still get a Mortgage if you’re on a Debt Management Plan?
A debt management plan, or DMP is essentially an agreement that has been made between you and a creditor, to clear the debt that you owe. Most of the time, this type of plan is implemented when you have debt problems but you can only afford to pay the creditor a very small amount each month, or if you can only make repayments in a few months’ time. If you are on a plan like this then you may wonder if you are able to get a mortgage, and that is a completely valid question. If you want to find out more about that then take a look below.
Can I get a Mortgage after a DMP?
Yes, you absolutely can. It is entirely possible for you to get a mortgage after your DMP has finished, but you have to keep in mind that there may be restrictions on what you are able to get in terms of your loan interest or even the loan you ae able to take out. If you do not have a good credit rating then you may find that you are charged interest on top of your regular payments. If you have a low credit rating then the mortgage provider may only give you a high-interest rate. This means that the total you’ll be paying back each month will be higher when compared to if you did not have a DMP at all.
How do I Improve my Chances of Getting a Mortgage?
Before you even think about applying for a mortgage, you have to take a look at the credit rating you have now. If you have a missed payment or if your DMP is flagged then this will be bringing down your credit rating. If you have defaulted on any credit and then used a DMP to clear it, it will stay on your record for six years. In this day and age, it is very easy for you to check your credit report online and this should always be your first step before you think about considering applying for a mortgage.
If you believe that you can stretch yourself to buy a property but this will mean taking out a bigger mortgage then you should try and avoid this if possible. If you can lower your expectations and buy a cheaper property then this will benefit you greatly. You can then take out a smaller mortgage and you may also be able to put a bigger deposit down too. This could bring down your interest rate too, which is a major bonus.
Source – Gov.co.uk
Payplan
