Getting a Mortgage With a Debt Management Plan (DMP)

Despite what you may have heard, getting a mortgage with a debt management plan is entirely possible.

At Echo, we don’t think your past should dictate your future. Every single day we help people with a history of credit issues, including DMPs, to find a suitable mortgage. While high-street banks might say no, there are plenty of specialist lenders who are happy to take a much fairer, more human approach to your application.

In this guide, we’ll explain exactly how DMP mortgages work, how much deposit you might need, and how our specialist mortgage brokers can help you take the next step.

Can you get a mortgage with a debt management plan?

Yes, you can. In fact, there are over 80 UK lenders who may currently consider applicants with a history of DMPs.

It can be incredibly disheartening when high-street banks automatically reject your application at the first sign of a DMP. Fortunately, the mortgage market is much bigger than the high street. There are specialist lenders who completely avoid rigid, automated credit searches and instead use real human underwriters to assess your application on a case-by-case basis. 

By taking the time to listen to your story and evaluating your application on its own unique merits, these specialist lenders give you a much stronger opportunity to secure the mortgage you need to buy your home.

Does it matter whether the DMP is active or settled?

Yes it does. Whether your plan is currently active or already settled (paid off) is actually what dictates how many lenders will be available to you, with your chances of approval being significantly higher if your DMP is settled.

However, if you have an active debt management plan, you shouldn't let that discourage you. With an experienced mortgage broker in your corner who knows exactly which lenders are sympathetic to your situation, you still absolutely have a chance.

Many specialist lenders view an up to date, active DMP as a sign that you have proactively taken charge of your finances. Usually they will just want to see confirmation that you have managed it well for the last 12 months, and ensure you won't be overstretched by adding a mortgage repayment.

If you have already settled your DMP,  those same lenders tend to view this incredibly positively, as it proves your commitment to your financial arrangements. You will find a much wider range of lenders available to you, with a greater number, the more time has passed since your plan was settled.

What else will lenders look at?

If you apply for a mortgage with a DMP, other than whether it’s active or settled, lenders will also consider the following:

• When your debt management plan was originally set up

• The total initial amount of the plan

• Any real-life circumstances (such as illness, death in the family or redundancy) that led to the DMP in the first place

• If active, how long it’s been in place and whether you have maintained on-time payments

• If settled, how much time has passed since it was cleared

How much deposit will you need for a mortgage with a DMP?

Many borrowers assume they’ll need a massive deposit to buy a home with a DMP. However, the reality is often much more comforting. Typically, you will need a deposit of 10% - 15%, falling to as little as 5% for settled DMPs.

The exact amount will depend on the overall strength of your application and how much of an impact the DMP has had on your credit file. Whatever your situation looks like right now, there are genuine options available, and we are here to help you figure out exactly what you need to get moving.

Can I remortgage for debt consolidation?

If you’re already a homeowner, and have a DMP, you may be able to remortgage your property to consolidate your debts into one monthly repayment.

If you have enough equity in your home, you can often remortgage to release some of that equity to settle your DMP entirely. Some lenders may actually insist on a debt consolidation remortgage if they know you have an active DMP, as they understand that this could be a more affordable option for you.

However, it’s important to remember that remortgaging is a big financial decision, and it’s not right for everyone.

How to get a mortgage with a debt management plan

Follow these simple steps to improve your chances of securing a home loan with a history of adverse credit, such as a debt management plan:

1. Download your credit reports:  We recommend downloading your credit report from all three main UK credit reference agencies (Experian, Equifax, and TransUnion), or using a multi-agency tool like Checkmyfile to see exactly what lenders will see. Please don't worry if your file doesn't look perfect or if you feel embarrassed by it, we look at these every single day. Having your report simply gives us a clear starting point so we know exactly which understanding lenders to approach

2. Gather your paperwork and DMP history: Because specialist lenders use human underwriters rather than algorithms, they will want to look at the bigger picture of your finances. You can get a head start by gathering your last three to six months of bank statements and payslips, as well as your original DMP agreement and a record of your recent DMP payments

3. Speak to a specialist broker: The most important step you can take is to avoid applying directly to a high-street bank. An automatic rejection can be disappointing, but also leaves a hard search on your credit file, which can knock your score down further. Reach out to a specialist broker who understands the DMP market. We'll listen to your story and take your application straight to the lenders who actively want to say yes to people in your position

Expert opinion

Can you get a joint mortgage on a Debt Management Plan?

Yes, absolutely! Many of our clients apply for a joint mortgage where one applicant has a DMP and the other has a clean credit history. In fact, this can improve the chances for the person with credit issues, compared to them applying alone.

Lenders will look at the joint income and the joint credit profile. While the application will still be assessed based on the lowest credit score, having a second applicant with a good credit history and a stable income can significantly boost your overall affordability and make the mortgage application stronger.

Lenders who may accept DMPs

While high-street banks rely heavily on automated credit scoring, specialist lenders use manual underwriting. This simply means a real human being looks at your application listens to your story and assesses your true ability to repay the mortgage.

Here are some well-known specialist lenders who actively consider applicants with DMPs:

Why use Echo Finance for your DMP mortgage?

Applying for a mortgage when you have adverse credit can feel overwhelming, and even embarrassing, but you don't have to do it alone. We specialise in helping people who have been turned away elsewhere due to having a DMP.

Our customers with DMPs love that we offer:

• No judgement: We understand that life happens, and isn’t always positive. We are here to find solutions, not to scrutinise your past

• Whole of market access: We have access to specialist lenders who do not deal directly with the public, including those who actively offer mortgages for people on debt management plans

• Expert guidance: We know how to present your case in the best possible light, so that your chosen lender will see your strengths, rather than past slip ups

 Speak to a DMP Mortgage Expert today to find out which lenders may be able to help you. Your initial chat with us is always FREE and there is no obligation to proceed