Debt Management & Mortgage Advice in Liverpool

A Debt Management Plan (DMP) is a formal agreement between you and your creditors, aimed at gradually repaying your outstanding debts. It all begins with a transparent disclosure of your debt level, allowing creditors to assess your financial situation.

They’ll then review your income and regular expenses to understand your spending patterns and identify areas where adjustments can be made.

Once these details are gathered, a tailored DMP is created for you, enabling debt repayment through manageable monthly instalments. Let’s explore how a DMP could benefit you, especially in your mortgage situation in Liverpool.

Improving Your Credit

Surprisingly, a DMP can actually improve your credit score. If your credit rating is currently below average due to existing debts, consistent monthly payments and reducing debt can positively impact your score over time.

As your score reflects the debt associated with your name, improvements in your financial situation should lead to a higher credit rating. This, in turn, enhances your chances of accessing better mortgage rates. However, keep in mind that lenders often require a larger deposit due to your ongoing debt.

Avoiding Defaults

Through a DMP, you can avoid a default notice – as long as one hasn’t been issued previously. Once a default is on your record, it stays there for six years, even after the debt is fully repaid. As your mortgage broker in Liverpool, we strongly advise against defaults on your record whenever possible.

Seeking specialist mortgage advice in Liverpool can help you set up a DMP to prevent a default. Lenders ask many questions when they see a default, so it’s best to avoid this situation if you can.

If you already have a default, it might be included in your DMP amount. However, having a default on your credit report makes loan approval more difficult.

Reorganise Your Finances

A DMP can be a valuable tool in tidying up your finances and regaining financial stability. Especially when applying for a mortgage or remortgage, a thorough financial review that includes your DMP payments and regular expenses is key.

For example, if you’re cutting back on non-essential spending before applying for a mortgage, it shows responsible financial management. This can reassure lenders, especially when you’re managing a DMP at the same time.

Debt Consolidation Mortgage Advice in Liverpool

In some cases, you might consider consolidating your existing debts into your mortgage. This increases the overall mortgage amount but securely attaches your debt to an owned asset. This process is sometimes referred to as a debt consolidation remortgage in Liverpool.

However, it’s important to speak with a mortgage advisor in Liverpool before proceeding with debt consolidation into your mortgage. We strongly advise against doing this without professional guidance.

You can easily book a free mortgage appointment with one of our experts online. Simply follow our Get Started process to select a date and time that suits you best.

Date Last Edited: September 20, 2024