Can I get a Mortgage with a Debt Management Plan (DMP)?

Currently being in a DMP, or having completed one recently, will affect your ability to get a mortgage. However, it doesn’t necessarily mean that you’ll not be able to obtain one. Instead, your options in the market will be limited.

There are many specialist lenders available, providing mortgages designed for people who’ve had credit problems. So even if you’ve been turned away by high street banks and building societies, don’t give up.

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Author: Carl Shave - CEO and co-founder
Last updated: 06 Dec 2024

What is a DMP?

A Debt Management Plan (DMP) is an informal repayment arrangement between you and a creditor that you owe money to. They’re used when the money that’s owed is classed as a non-priority debt [1], such as store and/or credit cards, and loans.

To be able to obtain one, you’ll need to pay your usual bills like your mortgage, rent and utilities. Then you’ll also need to contribute to your non-priority debts.

As DMPs are not legally binding, you can cancel an arrangement at any time[2]. There’s also no legal obligation for you to avoid taking out more credit.

An introduction to Bad Credit Mortgages

Bad Credit Topics

Whether it be late payments, defaults or CCJs, we’re here to help you secure a mortgage.

Can I get a mortgage if I have a DMP?

Yes, it’s possible, but it can be more challenging. Lenders will assess your financial situation, including the severity and timing of any credit problems.

High street lenders tend to rely on your credit score [3], which may be impacted by your DMP. However, less serious issues like late payments or small debts may be less of a barrier, especially if they are older entries. Your chances of approval increase if the DMP was resolved some time ago, but lenders will still closely scrutinise your affordability.

If your DMP payments are recorded as defaults, this can further complicate the application process. Additionally, if you have a substantial deposit, you may have already used it to pay off debt, limiting your options further.

For those struggling to find a lender, it’s best to seek professional advice. Expert brokers have access to exclusive deals that aren’t always available to the public, which may increase your chances of securing a mortgage.

What our Customers Think

What our Customers Think

We’re always glad to hear from our happy customers and how we’ve helped them along the way. You can read a few of our testimonials here:

Read more reviews
I wanted to share my experience with Just Mortgage Brokers, especially with my broker, Yasmin. After trying a few other sources of debt help and trying to remortgage without much success, I was feeling quite disheartened and had almost given up on finding a solution to my financial problems. Just Mortgage Brokers, with Yasmin's assistance, came to the rescue and made a significant difference in my life.
Robert Radcliffe
Professional, easy to use, made my mortgage process so easy, even with bad credit they managed to secure me a good deal, and they phoned me weekly to ensure my deal was going ok. After care is as good as the securing a deal for you.
Shaun Condron
Miracle workers. We decided to use Just Mortgage Brokers due to credit issues on my file. Daniel Hodgson has literally performed a miracle, and we have received our Mortgage Offer! For anyone who like us is struggling to get a mortgage due to a bad credit history or defaults on their credit file, or any other issues, I would strongly advise to use this company.
Kristina

Can you get a mortgage after your DMP has finished?

Once your DMP is completed, it may remain on your credit file for up to six years [4]. During this period, it can be difficult to secure a mortgage from mainstream lenders. However, many lenders will consider you for a mortgage once your DMP has been settled, particularly if it’s been over a year since completion.

After your DMP is settled, it’s important to ensure that your credit report reflects this accurately. If there are any remaining defaults or outdated information, work with the relevant creditors to update your credit file.

After completing a DMP, follow these steps to improve your chances of securing a mortgage:

  1. Review your credit report: Ensure all your personal details are accurate and that you’re registered on the electoral roll. Correct any errors or defaults for settled debts.
  2. Start rebuilding your credit: Take small, manageable credit lines and make payments on time. Consider a credit card with a low limit to help rebuild your credit history.
  3. Save for a larger deposit: Aim to save at least 15–20% of the property value. A larger deposit can help offset your credit history and increase your chances of approval.
  4. Consult a broker: If your DMP is recent (within six years), a specialist broker can connect you with lenders who offer products for those with credit issues.

DMP Mortgages: Myth vs. Reality

Myth

Reality

“I’ll never get approved for a mortgage.” It’s possible to get a mortgage, especially with a specialist lender or broker.
“I can’t take out credit or a mortgage during a DMP.” A DMP doesn’t prevent you from applying for a mortgage, though caution is advised to prevent financial struggles.
“I must wait for years after my DMP to get a mortgage.” Many lenders will consider you after 6 months to a year of a settled DMP.
“Bad credit means no mortgage options.” Specialist lenders cater to people with bad credit, though rates may be higher.
“I must clear all my debt before applying.” You don’t need to clear everything; lenders mainly look at affordability.
“I can’t get a mortgage with a small deposit.” Smaller deposits are possible with some lenders, though a larger one improves options.
“The mortgage process is too complicated.” A broker will guide you through the process, making it manageable.

How do DMPs impact mortgage applications?

Applying for a mortgage while in or after a DMP can be intimidating, but understanding how it affects your application helps you set realistic expectations.

High street lenders generally base their decisions on your credit score, which may be lower due to the DMP. Specialist lenders, however, consider the broader context of your financial situation. They may consider how well you’ve managed your DMP, your current income, and other factors beyond your credit score.

In most cases, you’ll need a larger deposit – around 15–20% – and may face higher interest rates. These requirements reflect the perceived higher risk of lending to someone with a history of financial difficulties.

This checklist is a guide to help you navigate the mortgage application process with a DMP:

  1. Review your DMP details: Make sure your payments are up to date.
  2. Check your credit report: Ensure your report is accurate and free from errors.
  3. Consider paying off your DMP early: This can improve your credit profile and open more mortgage options.
  4. Start saving for a larger deposit: A larger deposit can help secure better mortgage rates.
  5. Consult a specialist mortgage broker: We can help connect you with lenders who specialise in bad credit mortgages.
  6. Prepare your documents: Ensure you have recent payslips, bank statements, and details of your DMP.
  7. Get a mortgage in principle (MIP): We’ll help you get a MIP to show sellers and estate agents you’re a serious buyer with lender support.
  8. Submit your full mortgage application: When ready, we’ll guide you through submitting a complete and accurate application to avoid delays.
  9. Prepare for additional scrutiny: Lenders may ask for additional details to fully understand your financial situation – don’t worry, we’ll be with you every step of the way.
  10. Close the deal: Once approved, finalise the mortgage and start the exciting journey to homeownership or remortgaging.

How much can I borrow if I have a DMP?

The ‘loan-to-value’ (LTV) ratio available to you will be affected by your credit history. The LTV is the percentage you’re able to borrow compared to a property’s market value.

With a current DMP or a settled one in the past 6 years, it’s unlikely you’ll be able to borrow at a high LTV. Lending is likely to be restricted to 85%, so you’ll likely require a minimum 15% deposit [5].

More serious credit issues might mean a lender will ask for an even higher deposit. This reduces the risk exposure for them.

Are you struggling with affordability and limited lender options?

If you’ve been in a DMP or have faced financial challenges in the past, you might be concerned about affordability and the limited number of mortgage lenders willing to consider your application. However, by taking steps to manage your current financial commitments and improve your budget, you can increase your chances of securing a mortgage at an affordable rate. Here are some practical tips to help you enhance your affordability:

  1. Create a Realistic Budget

Start by tracking your income and expenses to get a clear picture of your finances. A well-planned budget can help you identify areas where you can cut back and redirect funds toward savings or paying off existing debts.

  1. Cut Back on Non-Essential Spending

Look for opportunities to reduce discretionary spending – things like dining out, subscriptions, or impulse purchases. Redirect the money you save into a dedicated savings account for your deposit or to pay down your existing debts. Even small sacrifices can make a significant difference in the long run.

  1. Pay Down Existing Debts

One of the biggest factors affecting affordability is how much debt you already have. Prioritise clearing high-interest debt, as it can have a serious impact on your overall monthly expenditure. If you have loans or credit card balances, consider paying them off or consolidating them into lower-interest options if possible.

  1. Increase Your Income

If your current income isn’t sufficient to cover your living expenses and future mortgage payments, consider looking for ways to increase your earnings. This could involve taking on extra work, freelancing, or finding a side hustle. Even small increases in income can improve your affordability ratio and make you a more attractive candidate to lenders.

  1. Start Saving for a Larger Deposit

The more you can save for a deposit, the better your chances of securing a mortgage – even with a DMP in your past. A larger deposit reduces the lender’s risk and may help you secure a better deal, including lower interest rates. Aim for a deposit of at least 15–20%, especially if you’ve had credit issues.

  1. Be Mindful of Your Credit Utilisation

If you’re using credit cards or loans, try to keep your credit utilisation below 30% [6]. This is the ratio of how much credit you’re using compared to your total available credit limit. A lower utilisation rate makes you appear more financially responsible and can improve your credit score over time, increasing your chances of securing a mortgage.

  1. Seek Specialist Mortgage Advice

With limited lender options available to those with credit issues or active DMPs, working with a specialist mortgage broker can be invaluable. A broker will be able to connect you with lenders who offer products specifically for people in your situation, improving your chances of approval. They’ll also help you navigate the complex affordability calculations and find the best deal for your financial situation.

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Frequently asked questions

It’s generally 12 months. However, you’ll likely need a larger deposit and may face higher interest rates.

Our team of specialist brokers can offer free, no obligation help and advice, so reach out if you want to explore your options.

Ideally, yes, to avoid further damage to your credit score. If you’re struggling to make payments, contact your DMP provider.

Yes, you can pay off your DMP early. Some creditors may accept a lump sum payment for a reduced amount after six months.

Yes, the monthly payments made to your DMP are considered in your affordability assessment when applying for a mortgage.

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Carl Shave

CEO and co-founder

About the author

Carl Shave has been involved in the mortgage & finance industry since leaving education and is one of the co-founders of Just Mortgage Brokers. He has written guest posts and provided journalist comments for companies such as The Times, FT Adviser, Mortgage Strategy, Mortgage Solutions and others, demonstrating his extensive industry knowledge.   Qualifications   Certificate in Mortgage Advice and Practice (CEMAP)   Year Attained: 2001   FCA Profile

Why choose Just Mortgage Brokers for your Bad Credit Mortgage?

  • This is our speciality – it’s what we do
  • Direct access to lenders underwriters enabling us to discuss your situation in detail
  • Exclusive deals available
  • Broker only bad credit lenders available to us giving you greater choice
  • Unlimited mortgage broker – giving a wide range of lenders at our disposal
  • Great customer reviews

[1] Citizens Advice (n.d.) Debt management plans – what you need to know (Accessed 8.11.24)

[2] Citizens Advice (n.d.) Cancelling your debt management plan (Accessed 8.11.24)

[3] Money Saving Guru (21.10.24) Mortgage Lenders That Don’t Credit Score Explained (Accessed 8.11.24)

[4] Experian (n.d.) Debt Management Plans (DMPs) and your credit score (Accessed 8.11.24)

[5] Money Saving Guru (8.11.24) What Deposit Do You Need With Bad Credit (Accessed 8.11.24)

[6] Compare the Market (3.3.23) What does your credit utilisation rate mean? (Accessed 8.11.24)

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