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Debt Management Plan Mortgages

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Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: April 26, 2022

If you’ve taken out a Debt Management Plan (DMP) to help you pay off ‘non-priority’ debts such as a personal loan, payday loan or credit card bills, you may be wondering what sort of mortgage you can take out.

While a DMP may affect your credit rating, it is possible to get a mortgage while on one, as long as you meet the lender’s criteria, and in this guide we explain how that is possible and where you can turn for the right advice.

Can you get a mortgage with a Debt Management Plan?

Yes, you may have options if you have a current and unsatisfied Debt Management Plan. Lenders will want to see that you’re able to afford the repayments on your mortgage and will contact your DMP provider for proof that you have shown satisfactory conduct and made your repayments for a period of time, for example six or 12 months.

The type of mortgage you could get will also depend on:

  • The length of time you’ve had your DMP (the longer the better, and satisfied even more so)
  • How much you owe (you may be able to settle some debts quicker)
  • How many years you plan on paying your debts off (average is between five to ten)
  • What your debts were relating to (e.g., overdraft or unpaid store credit)

The criteria for each lender will be different. Some will potentially accept your application, while some won’t consider your application for years after your DMP took place.

Bear in mind that if your Debt Management Plan was related to a secure/unsecure loan or a payday loan, some providers won’t accept your application. Getting a mortgage after a payday loan, in particular, can be far more difficult.

To ensure that you find the best mortgage lenders for your circumstances, speak with a specialist bad credit mortgage broker. They can access deals that aren’t available to the general public in order to give you exclusive options.

Did you know… You could access 30% more of the mortgage market with a specialist Bad-Credit broker on your side – Get Started with an OMA-Expert to unlock more deals and increase your chance of mortgage approval.

Eligibility criteria

To get a mortgage with a Debt Management Plan on your file, you will need to meet the mortgage lender’s eligibility criteria as closely as possible to offset the risk your debt creates. In this section, we’ll outline how much deposit you will need, what kind of affordability checks you’ll be subject to and what shape your overall credit report needs to be in…

Deposit requirements

If you have a DMP in place, some lenders may require you to put down a 15% deposit. A maximum 85% loan-to-value mortgage is typically preferred for customers with bad credit, and if you have any other adverse on your file, you may be required to put down more.

While no 100% loan-to-value (LTV) mortgages are no longer available, if you’re struggling to raise enough cash for a deposit, you may be able to benefit from an ownership scheme or get a guarantor mortgage.

Other credit history

A DMP to make things more manageable, but if you’ve been keeping yourself afloat in debt, you may have other credit issues such as missed or late payments, defaults, bankruptcy or CCJs.

In isolation, a CCJ mortgage, or a mortgage with defaults for example, could be accepted by some lenders, but throw in the DMP debt too and they may be less willing to consider the application.

It’s impossible to give specific advice, as each customer is different and may or may not be considered based on a number of factors, however, in general, borrowers with an active DMP can have:

  • Some late payments (max 3 months late usually)
  • Some defaults (max 2 registered in the last 2 years, any number older than this)
  • Some CCJs (max 2 registered in the last 2 years, any number older than this)

If anyone has more severe issues such as IVA/bankruptcy/repossession from the last six years and is also currently in a DMP then the likelihood of being accepted is low.

IVAs, bankruptcies, and repossessions are accepted by some specialist lenders if it’s the only issue you have, but adding in a DMP after these really limits lending options.

Income and affordability

The income and affordability rules for specialist DMP mortgage providers can differ to that of mainstream and high street lenders.

In the main, borrowers will be limited to 4.5x annual income. However, in certain circumstances, it may be possible to obtain 5x income or higher, particularly if you have a good sized deposit and no other adverse credit issues.

Affordability will be impacted by the monthly cost of your DMP, if you don’t plan to repay it either before or at the time the mortgage completes.

Some lenders will take into account the monthly cost of the original credit agreements and others will take the monthly DMP repayment figure.

For instance, if you had six credit agreements that cost £1,500 originally, and are now £500 in the DMP, lender A may assume you are committed to a £1,500pm payment and lender B £500. The impact of this is such that lender A may offer a much smaller mortgage than lender B.

How you earn your income can play a part in this, too. Many lenders have very restrictive lending rules when it comes to what income they accept.

Thankfully, a lot of the specialist DMP mortgage lenders have flexible and unique income policies, and can accept mortgage applications from customers with only 1 year’s accounts, or offer bespoke mortgages for company directors who need to use retained profits rather than dividends drawn, for example.

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Are there any homeownership schemes you could apply for?

Yes, potentially. If you’re unable to raise enough money to put down as a deposit for your home, there are schemes you may be eligible for that could help you make up the difference or get a mortgage with a lower deposit amount. You can still apply to these schemes if you have a Debt Management Plan.

See below for more information…

Help to Buy

The Help to Buy: Equity Loan scheme is available for first-time buyers as well as homeowners looking to move. You can only buy new builds with this scheme, however, the UK Government will lend you 20% of your property’s value for the first five years of owning your home. You’ll have to contribute a 5% deposit, taking you to 25% in total – meaning that you’ll only have to borrow 75% from a mortgage lender.

Shared Ownership

Also available from the UK Government, the Shared Ownership scheme allows people to buy between 25% to 75% of the property’s value, then you pay rent on the rest. Once you’re able to afford more, you could buy bigger shares.

Mortgages after a DMP

Even though a Debt Management Plan may have been settled, It’s really only made easier if you paid it off over three years ago, as this brings more lenders into the picture that are willing to consider your application (even one or two high street lenders if your application is packaged and presented in the right way).

The criteria is loosely the same for those who have only paid their DMP off within the last three years. However, affordability is enhanced when compared to those who plan to keep their DMP after the mortgage has started, and borrowing can be up to 5x income, provided there are no additional large financial commitments.

For those who want a mortgage after a Debt Management Plan they paid off over 3 years ago, there are more lenders willing to consider the application and, as such, rates tend to be naturally more competitive.

If you’ve had other adverse credit issues since the DMP was settled, such as defaults and CCJs, then these will have the biggest impact on which lenders are likely to consider your application.

Generally, when adding default or CCJs to a historical DMP you will be restricted to a handful of specialist lenders that stipulate a maximum of two defaults / CCJs in the last two years up to 85% LTV.  If you’ve had more serious credit issues in the last two years, you may need to put down more deposit (up to 30-35%).

Also, the rates and setup fees are likely to be far less competitive the more recent and severe the adverse credit issues are.

Did you know… You could access 30% more of the mortgage market with a specialist Bad-Credit broker on your side – Get Started with an OMA-Expert to unlock more deals and increase your chance of mortgage approval.


Can I remortgage in a Debt Management Plan?

Yes. You can refinance a property you own (assuming you’re eligible to do so) while in a Debt Management Plan. Many people choose to remortgage to consolidate debts, but be sure to seek professional advice before going ahead with this.

By remortgaging, you can borrow money against your property and use the released equity to pay off your debts. Once you do this, your credit report should mark your DMP as ‘settled’. However, it’s unlikely that a mainstream lender will extend your loan with an active DMP as it’s considered high risk – which is where specialist lenders come in.

Will a DMP affect my partner?

If you share a joint financial link such as a mortgage or loan, your partner’s credit rating could be affected by your DMP. However, if your partner is a second card holder on one of your credit card accounts, your DMP will have no effect. If you share any non-priority debts with your spouse or partner, it can be included in your DMP.

It’s also possible to set up a joint DMP. You can do this even if your partner earns a different salary amount to you, or if they have their own debts which they wish to include in the DMP.

If you’re concerned that your spouse or partner may be being affected by your own financial situation, you can request a copy of their credit report. Any financial link affecting you both will show up.

If you want to arrange a mortgage and your partner’s credit record isn’t affected by your DMP, you may need to decide whether you’re better off applying for a joint mortgage with one bad credit applicant, or take out a single mortgage.

Can I get a secured loan while on a Debt Management Plan?

If you have a current DMP, it may be possible to get a secured personal loan. If the terms of your Debt Management Plan allow you to apply for credit, you will usually be penalised with lower borrowing limits and higher interest rates. If you want to take out a loan to put towards a mortgage deposit, most lenders will turn you away.

Some DMPs prevent you from borrowing more money until you’ve finished the plan. You’ll need to check the terms of your DMP to find out if you’re allowed to borrow more money.

If your plan does allow it, you should always ensure that you never borrow more than you can afford.

Ask a quick question

We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in bad credit mortgages.

Ask us a question and we'll get the best expert to help.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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