A debt management plan (DMP) is an agreement that is made between an individual and a creditor (someone who you owe money to) to pay off unsecured debts in monthly instalments over time.

Unlike an IVA It is not a legal agreement and can be cancelled by either party at any time. 

It can be arranged either directly with a creditor or more commonly through a debt management company. The benefit of using a debt management company is that they will negotiate to repay more than one creditor and roll these individual payments into one monthly amount. DMPs are commonly used to help settle money owed on credit cards, bank loans, mobile phone contracts or store cards.

Can I get a mortgage while on a Debt Management Plan (DMP)?

Yes, it’s possible to get a mortgage while on a DMP. Most lenders will want to know that you have kept up with the agreed monthly payments on your DMP for a minimum of twelve months before they will consider your mortgage application. They will also want to see your most recent annual statement to evidence this. So, it will be more challenging but working with specialised mortgage brokers who have experience in this area will increase your chances of success. They can help you find the right lender who will consider your DMP and present your application positively.

Will my DMP affect my credit score?

Yes, being on a DMP can impact your credit score. Making smaller payments over a more extended period can be viewed negatively on your credit report, technically showing as if you are making underpayments. Quite often these debts will become defaults due to the fact that the original contracted payments are not being met. This can make it more challenging to obtain a mortgage, but with the proper support and guidance, it’s possible.

How can a mortgage broker help me with a DMP?

A specialised mortgage broker can provide invaluable assistance with a DMP. They have extensive knowledge and experience in this area. They can help you navigate the complex mortgage process, explain the requirements and documentation needed, and positively present your application to lenders. They can also help you find suitable mortgage options that match your unique financial situation.

Can I get a mortgage with bad credit and a DMP?

Yes, it’s possible to get a mortgage with bad credit and a DMP. However, it may be more challenging, and you may have to pay higher interest rates. Working with specialised mortgage brokers who have experience in bad credit mortgages and DMPs can help you find suitable lenders and mortgage options that work for you.

How can I improve my chances of getting a mortgage with a DMP?

To improve your chances of getting a mortgage with a DMP, working with specialised mortgage brokers with experience in this area is crucial. They can help you understand the impact of your DMP on your credit score, provide guidance on improving your credit rating, and present your application positively to lenders. Additionally, making timely payments on your DMP and other credit obligations is crucial to demonstrate your ability to manage your finances responsibly.