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If you’re on a debt management plan you may think it’s impossible to buy your own home with a mortgage. However, there are ways you can get a mortgage if you’ve had a debt management plan in the past, or even if you’re still on one. This NDS advisory post gives you the lowdown on getting mortgages with an active debt management plan in place, and we’re more than happy to talk with you if you need further support.
If you’re thinking about taking out a mortgage, you will need to have a deposit and meet all the criteria of your mortgage lender. Therefore, if you do have adequate savings to pay the deposit on your new home, and your regular income means you can afford monthly mortgage repayments, you may be considered for a mortgage. Of course, your lender will investigate your credit history as part of the standard research carried out prior to granting any mortgage, so you do need to be upfront about your debt management plan in your application.
The main reason it can be difficult to find a mortgage lender when you have a debt management plan is because lenders tend to get anxious when confronted by borrowers with poor credit. That said, the fact you’re on a debt management plan does mean you’re trying to get your finances sorted out.
Many lenders will refuse applicants with debt management plans, so if you’re already tried this route don’t be disheartened. You may need to approach specialist lenders. Many lenders and some of the more popular mortgage providers may decline applicants if they’ve had a debt management plan in place at any time in the past six years.
All the above can make it extremely difficult for borrowers to source mortgage funds on the open market.
The hard thing will be to find a mortgage lender prepared to offer funds to people with debt management plans. It often means getting in touch with the right brokers, who specialise in mortgage applications with this criteria. When you choose this route, you won’t be wasting precious time filling in applications for lenders with strict rules on lending and poor credit applicants. What’s more, if you keep applying for a mortgage in the hope you’ll find one that’s prepared to give you a mortgage, the continued credit searches will have a negative impact on your credit history and make it even more difficult to source funds in the future.
Debt write off applies to unsecured debts and on completion of an IVA. A debt write off amount of between 20% and 80% is realistic, however the debt write off amount for each customer differs depending upon their individual financial circumstances and is subject to the approval of their creditors.
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Free money help and advice can be found at the MoneyAdviceService.org.uk