Can anyone tell me about their DMP?

[GoldenMirrors]

Just had to apply for a Debt Management Plan after a year of hell. One year ago I was flying, had savings, good job. No missed payments, a new mortgage, and a good savings pot (for me) of £5k as a float. Then my boss was found guilty of fraud, and I lost my job of ten years overnight as his business went under. No plan etc. very quickly my savings went, and then I stupidly got a loan to pay the mortgage as couldn’t get a mortgage holiday as I was in the first year. I also used credit cards just to get by. Desperately applied for jobs everywhere including supermarkets, bars, and nothing. As a single person, was only entitled to £400 as UC. Even applied for factory work but wasn’t taken on, I think they thought with my CV I’d likely leave as soon as I could. I did some cleaning bits for my grandad. I used to earn £2900 a month and my bills reflected this.

Now I’ve found a new job, but I’m £23,000 in debt from 10 months off. The monthly repayments are £850 and eating me alive. I was having sleepless nights and not eating. However, I’m now worried. DMP have said I can pay back £150 per month but it’s going to take 16 years. I don’t want credit ever again, but I’m never going to be able to remortgage am I?

I don’t want credit ever again, but I’m never going to be able to remortgage am I?

There are specialist brokers but also you may well be able to take out a new deal with your existing lender when your current deal ends. Normally much easier than a complete remortgage.

Please can I check if you actually defaulted on any of your card/loan/mortgage payments, as level of debt isn’t necessarily prohibitive to you remortgaging.

People also use the term “remortgage” interchangeably - to move the mortgage to a new lender, to borrow more money with their current lender, and to change their mortgage product (at the end of a fixed rate for e.g) - depending on which of these you’re referring to, the answer will be different!

A remortgage (move your mortgage to another lender) will involve a credit check, which if you have defaulted on any credit payments in the past will show, and raise questions that present you as a higher-risk to the lender. If you didn’t default, the new lender will need to ensure that your commitments are affordable as part of their overall checks.

You’d need to take advice on this as there are pros and cons, but you could explore a “debt consolidation” loan as part of the remortgage - ie borrow against your property when remortgaging and add an additional £23k to pay off the debt. Will lower your payments as linked to mortgage term, but in turn you pay more interest, and of course, your home is at risk if you don’t keep up payments so definitely worth talking through with an adviser.

All of the last paragraph applies if you were meaning to borrow more money with your existing lender too. And there would be a credit check involved too.

If you’re just wanting to change your mortgage product (end of fixed term for e.g) with your current lender, there’s not usually a credit check involved - you can just rung up and see what’s on offer. You don’t always get the same rates as new customers when staying with your current lender.

Well done for getting on top of things, don’t be too hard on yourself - it’s tough out there! Sounds like things are turning a corner for you, so best of luck with the new job x