You’ve just finished paying off a Debt Management Plan (DMP). No mortgage lender will touch you, right? Wrong. Although it may seem unlikely, there are situations where you can take out a mortgage after, or even during, a DMP. At James Leighton Financial Services in Nottingham, we’ll be happy to tell you more.
What is a Debt Management Plan?
First things first. A Debt Management Plan is an agreement between you and your creditors to pay off all your debts. DMPs are usually used when:
- You can only afford to pay creditors a small amount each month
- You have debt problems but will be able to make repayments in a few months
DMP and mortgages
It might surprise you, but you can take out a mortgage with the right lender. As a DMP never appears on your credit file as an entry on its own, lenders assess the underlying defaults instead, which each stay on file for six years from the date it was recorded.
Lenders and DMPs
Specialist lenders are usually clear about their DMP criteria:
- Minimum time on the plan
- Conduct requirements
- Maximum Loan to Value (LTV)
- Adverse tiers keyed to the age of the underlying defaults
High-street, credit-scored lenders generally have no published DMP rule.
