Mortgage and paid off debt management plan

[PleaseUseTheSanitaryBinsProvided]

I got on a debt management plan in 2019, paid it off early in 2022.
This was for unsecured debt of around £17K, which I accrued because I was in a low paid job, paying for tuition fees and didn’t have access to maintenance or student loans. I ended up losing control of various balance transfers, etc, and it snowballed to a ridiculous level of debt.

I worked really hard and turned a financial corner, and learned how to better manage money.

Partner and I have saved well and are trying to get a mortgage now. Mortgage broker pretty much said that only one bank (Accord/Yorkshire building society) will accept my DMP history whilst offering a reasonable (ish) rate - this rate still makes it unaffordable for us.

Has anyone had a different experience, or knows any different? Has any hope for us, or has any pointers?

I know we may need to wait/save more/put more time between paying the DMP off and applying for a mortgage but thought I’d ask you lovely crowd. Thanks!

It will stay on your credit file for 6 years according to Google

What % deposit are you looking to put down?

The higher your deposit, the lower the risk, and the better the rate & amount of lenders you will have.

However the vast majority of high street lenders will not offer you until you’re 6 years clear of paying off DMP.

we have 10% - we live in London so getting our eyes gouged by houses prices

In that case you’ll probably just have to wait the 6 years from it being paid off.

Thank you, do you work in the field or have personal experience? When you say “most”high street banks won’t accept a dmp, that means some/which ones do?

I used a really good broker… advised that as soon as you hit the 3 year mark of it being settled there are a LOT more options available. It does stay on your file longer but the 3 year mark is the pinch point.

We had to wait 6 years post repayment of DHs dmp before adding him to the mortgage. We stayed in a smaller home until then with mortgage in my name only.

My husband is in the industry, he’s a mortgage and protection adviser so it’s his job, and part of my job used to be assisting those in debt & getting out of debt, so work based experience on both sides I suppose.

Typically high street lenders will not consider applicants who have had a DMP until 6 years have passed, some will after 3, but it’s all totally situation dependent. So say applicants who previously had a DMP and now have 100k annual salary, looking to buy a 200k house with a 50k deposit are more likely to get a deal as it’s clearly affordable, they’re not borrowing to the max of their budget, the loan to value ratio, essentially the risk is lower. Compare that to applicants who previously had a DMP who now have a 70k salary looking to buy a 350k house with a 35k deposit, they are borrowing to the max of their affordability, the loan to value ratio, the risk is bigger, so it’s less likely. Does that make sense?

It’s really worth calling an independent financial adviser, someone like my husband, lots offer free advice (as they get paid in commission from the banks so don’t charge clients anything), independent ones can access the whole of the market so they can see what your options are.

Was this an IVA rather than a DMP?

Thank you, I just noticed that most of the ‘defaults’ and ‘DMP’ on my credit score are up to July 2021, then the higher debt I had has something up to january/2022. So close!

may I ask, who was your adviser/broker?

🤔 a DMP

Thank you for a v detailed response, @Mrsttcno1 , it makes a lot of sense.
our circumstances are high LTV/90%, and max affordability (the house is 4.5x our combined income).
my partner is squeaky clean and not a first time buyer.
I definitely hit the 3 year mark in january 2025, with most of the ‘defaults/dmp’ on my credit file last recorded in july 2021.

we’ve had a broker throughout, but haven’t sought a second opinion. do you think I should?

Unfortunately with 10% deposit and going to the absolute max of your affordability you’re going to be high risk, so that plus DMP would probably be enough for the main high street lenders like Nationwide to decline.

Is the broker you’ve spoken with an independent one?

not independent, no - they’re from the Mortgage Advice Bureau, which seems to also be a trading name of Wenham Mortgages @Mrsttcno1

Hello, I went on a DMP in Sept 2017 after defaulting all accounts. I paid it off by May 2020, and since jan 2024 my credit reports has no defaults and nothing showing on there to say I was on a DMP. Thought that might be useful to know! We’re looking at mortgages from next year.

For loans and credit cards, the Default should occur within 3-6 months of being in arrears/on a DMP.

How many defaults do you have op, what date did your DMP start and what are the dates of your defaults?

I would start with this information then go through them one by one and in cases where the Default is more than 6 months, contact the lender and try and get it backdated. If they say no to a request, complain. Then FOS.

You can possibly use what other lenders did as a guide for whats reasonable. So if you had 6 credit cards, 4 of them applied defaults 3 months after you started a DMP but the other two waited two years, you have a good case to argue for backdating.

It's worth doing because a 2019 Default will have a far lower impact on your credit file than a 2021 one. Plus, of course, will disappear altogether two years earlier.

Look also for any lenders that didn't default at all, just marked you as being in an arrangement. That will have a huge impact as it will remain visible for 6 years from when the debt was paid off.

Have a look at this which is a decent guide:
debtcamel.co.uk/debt-default-date/

Yes this is a good point - I had two defaults that were applied after the DMP took place, didn’t know anything about it until I got cheques through the post for refund and compensation of interest fees…

I used simply adverse as a broker who deal with more tricky cases
They're amazing and got me a mortgage I didn't think was possible. Might be worth giving them a call

Ohhh did not know about this and will have a look. I think some of them show as defaulting multiple consecutive months, the other shows me as being on a DMP until I paid it off - wasn’t even my original creditor as the original sold the debt on