Mortgage with Debt Management Plan - All You Need to Know with Complete A-Z Guide, FAQs & More

If you are looking to get yourself in a debt management plan and you have concerns regarding your mortgage, you are at the right place. Many people find themselves in deep waters when they make an impulsive decision regarding their debts or mortgage. 

I promise you that you don’t want to be one of them, hence, today I am discussing all the relevant problems and their solutions which are concerned with Debt management plans and mortgages. 

Stick with me till the end to find all on this topic.

Table of Contents

What is a (DMP) Debt Management Plan?

A debt management plan is fundamentally a finance technique or strategy that is used to clear debts. In this, you pay back the amount to your lenders at a rate at which you can afford or is suitable for you. 

This strategy or technique is perfect for people who have a bad credit history and their lenders are constantly nagging them for the debts they owe. 

A dmp usually works by getting a dmp company/provider on board. These dmp providers talk to your lenders, negotiate with them, and try to land on a deal. You usually pay a fixed monthly amount of payments back to your lenders which is a part of the dmp strategy. 

Dmp providers are also useful to provide one with sound debt advice, especially those with a tough credit history.

Is it possible for You to Get a Mortgage while on Debt Management Plan (DMP)?

Getting a mortgage while being on DMP is not an easy thing to do and I won’t sugarcoat it. But the short answer to this question is that yes! It is quite possible to land a mortgage with DMP. 

This might not be as easy as compared to getting a mortgage in a normal situation but it is surely doable. The reason why it is hard to get a mortgage while being on a DMP relates directly to the bad credit history one might have. 

DMPs are usually opted for by people who are already struggling with their lenders and the existing debt amount. On the other hand, mortgage lenders such as banks see mortgage lending as their investment. 

There is a simple rule in the world of investing, which is to minimize the risk as much as possible. For a mortgage lending institution, the dmp reflects a bad credit history and hence, it increases their investment. 

A person who is already struggling with debts, might not be able to pay off the mortgage repayments. This is why getting a mortgage with a dmp might be hard. 

But don’t be disheartened. There are many companies and private organizations that are registered in England, authorised and regulated by the financial conduct authority of the UK who specialize in providing dmp mortgages and mortgages to people with a poor credit score. 

You can search for these companies; take sound advice from a financial advisor to see whether to get a mortgage from them or not.

DMP Mortgage Lenders

As I just discussed above, there are quite a ways to get around getting a mortgage with a DMP. I have listed down below some of the best ways that you can use to get mortgages with DMP. 

Bad Credit Mortgages Lenders

Some specific institutions are willing to mortgage homes and properties to people with bad credits. These institutions usually have more formal paperwork and a higher rate of monthly payments since they have a higher risk as well. 

There are many poor credit mortgage lenders in the UK which are authorised by the financial conduct authority of the government. 

Apart from that, do check out the authenticity of these companies because recently there are many instances of fraud and shady dealings in the mortgage sector. A good way to check the authenticity is either to look up the company’s registration number, visit their office, or look up on their website. 

You can always take advice from a financial advisor about the best suitable company for you. 

You can look at some of the companies by clicking here. 

Direct Lenders

Direct lending is a very simple and old finance raising technique. This simply relates to when you directly take money from a lender, it does not involve any third party in it. This kind of lending is hard to find due to the risk involved in it for the lender.

However, if you can find a direct lender, you might be able to easily get a mortgage due to them. Direct lending mostly relates to higher APR rates and at times also requires collateral. 

The contract agreement, however, is based upon your and the lender’s agreement and hence you might be able to negotiate the terms with them. 

The best part about this type of finance raising is that it does not hold any third party in between. Direct communication is established. 

Mortgage Brokers

Mortgage brokers might be the best way for someone who is looking for various lenders and options for their mortgage. Mortgage brokers are not direct lenders, they just help you find a suitable match for your needs. 

A match for your mortgage will increase your options and choices as mortgage brokers are specialized in finding the right people as well as providing good advice. 

A mortgage broker is more likely to land you a good deal compared to if you went on a mortgage deal-hunting yourself. The brokers surely are a relatively expensive option since they charge commision on the deals they broker. 

How to choose a mortgage broker and the top mortgage brokerages in the UK. Everything that you need to know about this is mentioned here. 

To know more about DMP Mortgage Lenders, you can also check my detailed article by clicking on this link.

Mortgage after Debt Management Plan

A mortgage after a DMP is not as hard to get as compared to a mortgage with a DMP. There are many concerns relating to the mortgage after a DMP however. The fact is that many creditors still might not be willing to lend you due to the DMP and the credit score in your credit file. 

In this instance, you can again opt-out for the DMP mortgage lenders. But there is quite a high chance of the high street lenders allowing your mortgage, only if you have successfully ended your DMP and are striving better for a good credit score. 

To read in-depth about mortgaging after a DMP, you can check my article on this by clicking here.

Remortgage with a Debt Management Plan

Remortgage with a DMP is simpler than getting a new mortgage on the property. However, this certainly does not mean that you will have no problems with remortgaging your property. 

The creditors will surely recheck your credit history before remortgaging the property, and the DMP will affect your application. 

To know more about remortgaging and its pros and cons. Check my detailed article on this topic.

FAQs

Should I get a Mortgage while I am on DMP?

This depends on you and your financial situation. If you think that you will be able to pay back the mortgage repayments on time simultaneously while keeping up with the payments of your debts, you might not have to worry about getting a mortgage alongside a DMP. 

However, if you are already facing financial problems, I would not suggest you get a mortgage because that would certainly jeopardize your financial future. 

You can get advice from an accountant or financial advisor relating to the feasibility of your mortgage payments alongside your DMP.

Does DMP negatively affect my Credit Rating?

It does not directly relate to your credit rating, the success, and failure of the DMP however put an impact on your credit scoring. If you are paying your debts on time you might be able to improve your financial score. 

On the other hand, if you struggle with a DMP and still are not able to clear off the debts. Your credit rating might be adversely affected. 

Where to Get Free DMP Advice?

Many free debt charities are helping people who are struggling in their financial lives. You can look up for them and contact them to get free debt consultancy and advice services. 

One of the most prominent names in this area is StepChange and they are working night and day to help people get out of bad debt. 

You can check their website and contact them by clicking over here. 

Another great charity to get debt advice from is Payplan.

What is the Best Way to Get A Mortgage While on DMP?

As mentioned in this article, there are several ways that you can use that can help you get a DMP while being on a mortgage. 

In my opinion, a quite suitable way for many people is to opt-out for low credit mortgage companies or a mortgage broker. I would typically not suggest a direct lender because the APR is high but if you are getting a good deal from a direct lender, you might want to avail it. 

There is no one fixed pattern for anyone, look at your demands and your situation before opting for a mortgage option.

How Long is a Mortgage?

Mortgage terms depend on the amount and the payback period that you are availing. Usually, there are 3 categories of mortgage terms. Short, Medium, and  Long. The short terms stand anywhere from six years to 10 years (or shorter at times), the medium goes from 10 to 20 and the length goes from 20 to 30. 

Afterword

Having a mortgage is a serious responsibility and one must not opt for it without full planning. Everyone must look at their situations and their financial standing before opting out for a mortgage, especially with a DMP. 

I hope this article helped you to understand the impacts of the DMP on your mortgage and how to avail of the mortgage if the high street lenders have declined your application. 

I wish you luck in your financial life ahead and please feel free to contact me if you have any queries.

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