Mortgages with a Debt Management Plan

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Mortgages with a Debt Management Plan

Prior credit problems or debts won’t necessarily stop you from buying a home. With good financial advice, you could even find a mortgage with a Debt Management Plan.

What is a Debt Management Plan?

You can set up a Debt Management Plan by contacting a debt expert. It’s a way of getting on top of your debts and paying them back, by making a single monthly payment that’s split between the organisations you owe money to.

It’s a popular solution to resolving priority debts on loans, credit cards and finance plans.

How much does a Debt Management Plan cost?

Some providers will charge a fee to set up a Debt Management Plan, but others are free, so it’s good to shop around before making a decision.

While a Debt Management Plan makes it more affordable to pay off your debts, bear in mind that it will take you longer to clear the balance and you may pay more interest overall.

Will a Debt Management Plan affect my credit file?

It’s standard practice for companies owed money to inform the credit agencies about the Debt Management Plan.

The mortgage would still be classed as a bad credit mortgage until the 6 years are up or the credit score has improved to a good score again. Debt Management Plans are taken fairly seriously by financial providers, but they do recognise as a sign that you are addressing your debts.


Will anyone lend to me with a Debt Management Plan?

Bad credit can make it more difficult for people to find a mortgage, and many high street lenders won’t accept people with a Debt Management Plan.

That said, certain lenders are more interested in the details of your credit record than the overall credit score. If you have completed your Debt Management Plan to repay all the debts and have stayed in credit since, specialist lenders may offer you a ‘bad credit mortgage’ deal.

Generally if you can put down a larger deposit you will have a better choice of lenders. Saving up to 20% or more of the property price will open up more mortgage products. A good deposit will also reduce the monthly repayments on your mortgage.

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Whether you’re buying your first home, expanding your portfolio or looking for insurance to protect your loved ones, our friendly service and expert know-how can help ensure you get the most suitable solutions for you.

How do I improve my credit score if I am on a Debt Management Plan?

If your Debt Management Plan is still running, you must stick to it rigidly and make all payments on time. Once you have settled your debts, avoid going overdrawn and make sure you are never late with bills.

There are special credit cards available to help build up your credit score, but you must stay within your limits and clear the balance regularly. Avoid applying for too many financial products – this can actually damage your credit score because it looks like you are in need of money.

What are the eligibility criteria for a mortgage with a Debt Management Plan?

The criteria are different for every lender, but mortgages with a Debt Management Plan might require a certain level of deposit. There could be set affordability requirements and you will usually need to have been in permanent employment for a minimum length of time.

A good mortgage broker like First Thought Financial Services will narrow down the options based on your circumstances and find a suitable lender. We will also help you with applying for a mortgage.

Are there any home ownership schemes I can apply for?

The Government has set up a number of Home Buying Schemes to make it easier to get on the property ladder.

These don’t assess people on their credit, so if you can successfully get a mortgage, you should be eligible for these schemes.

How can First Thought Financial Services help me?

Adverse credit can make it harder to find a mortgage deal, so if you want to buy a home it will be very helpful to seek expert advice. We have access to dozens of specialist lenders who may accept your specific situation. We will support you at every step – starting with a look at your credit record and seeing whether you are in a good position to buy a home, and then supporting you with your mortgage application.

To find out more about how we can help you, contact us today.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or other debt secured on it.

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