If you are struggling with your debts and mortgage, or if you have a DMP alongside your mortgage, you might want to read this complete article.
Today I will be discussing the impacts of DMP on your mortgage and the effects of it if you are thinking of getting a new mortgage loan and whether it is possible to get one or not.
Let’s begin without further ado.
What is a Debt Management Plan (DMP)?
A debt management plan is a personal finance technique with the sole purpose of paying your debts back to your creditors at a speed that is suitable for you. The debt management plan is drafted out or strategized by a debt management company usually.
The DMP practitioners will help you construct agreement terms with people to whom you owe (creditors) money or your potential lenders while charging a fee for their services.
How Does it Affect Your Mortgage?
There are no direct implications of a DMP with an existing mortgage, however, there are some indirect problems that might occur if you have a DMP as well as a mortgage.
Handling mortgages for people is quite difficult at times. If you have a DMP with a mortgage, the mortgage payments might be disturbed. It might be hard to keep up Repayments on your mortgage at the same time as clearing debts that you owe to people might harm your financial life.
Can You Get a New Mortgage with a DMP?
Getting a mortgage with a debt management plan might not be as easy as it seems. Usually, the institutions that allow mortgages are commercial banks that are authorised and regulated by the financial conduct authority.
These institutions or lenders conduct risk and gearing analysis to minimize the chances of loss. Applying for a mortgage might be difficult if you have a DMP because your chances of not paying back are higher compared to a person who doesn’t have a DMP along with their mortgage application.
This is since you might have problems keeping up repayments of your mortgage and debts at the same time and it may put off the whole mortgage scheme. This will bring you credit problems as well.
Hence, your credit report will be analysed and every detail of your credit report will be a crucial factor in the success of your application. You might be able to get a good mortgage deal even though you have a DMP, this depends on the bank and your credit scores.
What are Your Options to Get DMP Mortgages?
Don’t worry if you have been rejected by the commercial banks or mainstream lenders due to your credit history or credit issues. There are some ways and other mortgage options that you can look at to get a mortgage.
Bad Credit Mortgages Lenders
If you have been rejected for a mortgage due to your bad credit score or credit record by high street lenders. Many institutions might be able to help you. These institutions usually accept people with low credit scores on their credit file.
You might get a mortgage if you apply to these institutions. This is a link that shows the best financial companies that offer mortgages to people with low credit on their credit file.
They also have a bad credit mortgage calculator that you can use to know more about the details of your mortgage.
Click here to check them out.
Help to Buy Scheme
This is a government scheme of the UK which was started a few years ago. This scheme provides equity loans to persons who are building their homes for the first time.
The loan values might be different but the purchase price of the house must not be more than 60,000 pounds.
You can apply to this scheme only if you are purchasing your first house. Who are opting for their second house or looking to rent the property out might not be able to avail of this scheme.
A direct lender is a person who lends you directly without any involvement of a third party. This type of lender is hard to find but you can always look for them in your friends and family.
Direct lending is usually secured against collateral because it is a high-risk venture for your potential creditors. The debt amount might be paid to you in a lump sum and your home may be repossessed.
Mortgage Broker or Credit Reference Agencies
Mortgage brokers are specialist lenders finders. Their specialist area is to find lenders and persons who need the money.
Usually, the agreement has a mortgage with a settled amount of interest and down payment, which is fixed by both of the parties. Mortgage brokers charge a fee for their services.
You can check out the best mortgage brokers by clicking here.
Does DMP affect my Credit Rating?
DMP does not directly affect your credit rating but if you are unable to pay your debts back, such as credit cards debt, etc. It might affect your financial score and credit events.
Are DMP and IVA the same?
No. DMP is not similar to IVA. IVA is a solution to avoid bankruptcy and has major drawbacks and limitations on your financial life. Debt management plans are used as a strategy to remove debt and pay them back.
Is it a Good Decision to get a DMP mortgage?
There is no straight answer to this question. It depends on what your circumstances are and how well you can manage the debt repayments along with the non-priority debts.
Hence, if you deem yourself capable of managing a Debt management plan with a mortgage, you might do so.
What are the best DMP companies?
Many good companies are giving sound and solid mortgage advice. Many high street banking institutions are also good. This article refers to the best companies for DMP.
How to Apply for a Mortgage?
You can apply for a mortgage by filling out a mortgage application with mortgage specialists lenders. The form usually holds private information and other relevant information.
Wrapping it Up
I hope this article helped you understand the impacts of dmp on your mortgage and your financial life. Surely you might have gained some insights regarding DMP mortgages and whether it is right for you or not.
I wish you luck and all the best in deciding this matter. If you have any queries please feel free to email me or visit my website.