Can I Get a Mortgage if I have a Debt Management Plan?

December 9, 2014

Luke-Notley small (Custom)With many debt management plans lasting upwards of ten years, there is a high chance many people in such a plan will decide they want to get onto the property ladder. The financial constraints and affected credit rating of being in a debt management plan may make the prospect of securing a mortgage seem like a pipedream, but here we explore how there may be light at the end of the tunnel.

 

Where There’s a Will, There’s a Way

There are no laws against agreeing a mortgage whilst on a debt management plan, so debtors may be able to secure such an agreement. If throughout the process of your debt management plan, you have demonstrated an ability to afford the agreed upon repayments at a level satisfactory to your creditors whilst saving a little extra cash at the end of every month, you may be able to put together a sufficient deposit and demonstrate an ability to make the required mortgage repayments.

Affected Credit

Perhaps the biggest hurdle you will have to overcome when trying to secure a mortgage whilst in a debt management plan is bad credit. Mortgage lenders will instantly check your credit file for a record of a debt management plan. This could either dissuade the lender from placing their trust in you and your finances or encourage them to increase the level or interest and deposit they require.

Additionally, the likelihood you can secure a mortgage is largely dependent upon the level of deposit you can put down. If your finances have taken a beating from paying back debts, there is a good chance you won’t be able to afford a high percentage deposit.

Bad Credit Mortgages

Whilst the recession and housing market crash have reduced the number of bad credit mortgage deals that lenders are likely to offer, there are still options to secure a bad credit mortgage. Whilst the terms may not be as favourable as those offered to mortgage-seekers with a positive credit rating and no outstanding debts, they can help debtors and those with historical financial woes get onto the property ladder.

As well as people in debt management plans, bad credit mortgages can also help people with no credit history, low credit score, CCJs, IVAs and even those who have filed for bankruptcy.

Improving Your Chances

There are a number of ways you can improve your chances of securing a mortgage whilst in a debt management plan. Taking steps to improve your overall credit rating can help persuade mortgage lenders that you are a reliable and worthy investment.

Furthermore, it is important to continue making your debt management plan payments in a full and timely manner. This will demonstrate to potential lenders that you are taking responsibility for your debt and are able to comfortably afford your current repayments.

For more tips helping you improve your chances of working out of debt and getting onto the property ladder, visit the InControl homepage or call our dedicated advice team on 0800 072 6623.