Is this really bad financial advice from from a FA?

[IncessantNameChanger]

Someone coming out of a divorce with enough profit from sale of the marital home to by somewhere with a 10-20% mortgage ( ie 80-90 deposit). But has a dmp

Financial adviser advices to pay off debts. Person is over 50 and the debts will be on their credit record for at least three years maybe five.

I'm guessing if they had secured the house with a 20% mortgage they have a assets but if they pay off the debts they wont have a clean credit record anyway until they hit 55 and then need a bigger mortgage as lots has gone to pay the debts off.

Maybe it wouldnt have been possible with the bad credit anyway? It just seems bad advise if there was a possibility to invest in a property with a tiny mortgage rather than pay down a dmp.

I guess it's more doable if you have the years to get clear of credit ratings and then have the years left to get a 25 year mortgage.

I guess because they was never going to granted a mortgage even for 10k with a dmp? If not it seems really bad advice

I'm not an expert but I suspect anyone with a DMP will only be accepted by weird lenders with high rates.

Thanks for the reply. I think just writing it down your right. It was never going to happen with a dmp in the mix.

They’ll struggle to get a decent mortgage rate with a debt management plan, it’s sound advice to clear debts before taking on more (which is what a mortgage is!)

Some lenders will go up to age 75 so in theory you could get a 20 year mortgage at 55. Definitely a 15 year one. That's what I would do in this situation - pay down, apply in a few years.

Well the issue really is that no-one is going to lend him money if he has a DMP.

If he can raise 90% of the mortgage anyway, why doesn't he just buy somewhere cheaper and pay cash? Especially at his age.

Yes this is all true. It just seems as they only needed a tiny mortgage of about 20k at most, they have been saddled with a lifetime of renting instead. Feels bad that they almost had a house but I just if it wasnt affordable it's not affordable.

20k is still a lot of money. I think it's just compared to the price of a house its peanuts. It's still 20k. Hopefully it was the right advice then

It doesn't matter if it's 20k or 200k though, if it looks on paper like you are crap with money they won't give you any at all unfortunately!

@ThisIsStartingToBoreMe

Well the issue really is that no-one is going to lend him money if he has a DMP.

If he can raise 90% of the mortgage anyway, why doesn't he just buy somewhere cheaper and pay cash? Especially at his age.

This. Buy somewhere cheaper outright.

Seems like it was the right advice then 😭

Dmp was paid off so the money has gone now. I think they could have something cheaper before paying off the dmp but I suspect not now it's been paid. Not enough left now

A DMP is often a negotiated settlement so as a creditor I would have been mightily peed off if he had gone and bought a house. He might well have not had to then pay rent but would still have to pay the debts.

The correct course of action is to pay the debts and be debt free but still renting - he has no debts hanging over him or hounding him and can afford to be in rented.

The DMP ate up all the money - like, the 80-90pc deposit they had?

It must have a sizeable DMP - no way would anyone have lent to them.

No dmp wasnt all of the deposit but yes it was sizeable. Over 10k.

So with paying off the dmp and needing a top up mortgage in the first place, buying was off the cards. Without paying off the dmp it might have been possible to get somewhere cheaper outright.

So if you come into money, the dmp needs paying off first anyway? I guess it does. In which case it's all moot.

I keep thinking they was given bad advice, but if the dmp is owed as a priority in law to the creditors then there was no other way?