Debt Management & Mortgage Advice in Hull
A Debt Management Plan or a DMP is a formal agreement between you and your creditors to help you pay off your debt. The plan usually starts with you declaring how much debt you’re in then your creditors can get a picture of how severe the situation is.
They will then want to know all about your income and your expenditures. This will help them work out your spending habits and see whether there are things to cut back on.
Once they have these details, you will be put on a DMP tailored to you and your finances. To repay your debt, you will receive monthly payments at a reduced and more affordable rate.
In this article, we are going to look at how a DMP can benefit you and your mortgage in Hull.
Improving your credit
Believe it or not, being on a DMP can improve your credit. If you have poor credit at the time of taking out a DMP, meeting your monthly payments and slowly paying off your debt can have a positive effect. If you think about it, you’re clearing debt from your name, therefore, with time, it’s only fair that you start to gain points on your credit score.
Having a higher credit score can potentially open you up to better mortgage rates. You will still need to provide a much higher deposit as usual as you’re still in debt.
Avoiding defaults
By working on a DMP and keeping with it, you may be able to avoid a default, unless you’re already associated with one. Once you are issued with one, it will not be removed from your file for 6 years, regardless of whether you’ve paid off the debt.
Having a default that is in your name can have an adverse effect on your credit score. As a Mortgage Broker in Hull, we would highly recommend avoiding a default if it is possible.
If you speak to an expert, such as a Specialist Mortgage Advisor in Hull, you may be able to get a quick DMP together and avoid a default. Every lender will ask lots of questions when seeing a default in your name. Ideally, you don’t want to be in this situation.
If you’ve already been issued with a default, you may be able to incorporate the amount owed into your DMP. The default will still appear on your credit file, which can negatively affect your chances of being accepted by most lenders.
Reorganise your finances
Having a DMP in place can help your sort out your finances and get you back where you need to be financially. Re-evaluating your finances, particularly in the lead up to a mortgage/remortgage application, is always a recommended option. This includes your DMP payments and your current outgoings.
To provide an example for this situation, you could cut back on gambling during the lead-up to your mortgage application to ensure that you’re looking reliable and managing your finances responsibly. Your lender will see it as irresponsible if you’re on a DMP and are going out and spending large chunks of your income on gambling.
Debt Consolidation Mortgage Advice in Hull
In some circumstances, you may not want to take on a DMP and would prefer to incorporate some of your owed debt into your mortgage. Your total mortgage amount will increase, but you’ll be ensuring that your unsecured debt becomes secured against an asset.
Debt consolidation is a specialist subject and you may need assistance from a Mortgage Advisor in Hull during the process. We would never recommend that you consolidate your debt into your mortgage without conversing with a professional.
You can book a free mortgage appointment with an expert online. Follow our Get Started process to choose a date and time best suited to you.
Date Last Edited: 11/13/2024
