Can You Get a Mortgage with a Debt Management Plan?

A Debt Management Plan (DMP) can help you regain control of your finances, but many people worry it will stop them from getting a mortgage in the future. The reality is more nuanced: you can get a mortgage with a Debt Management Plan, but lender attitudes vary depending on whether the DMP is active, how it appears on your credit file and the strength of your recent financial conduct.

This guide explains how lenders assess mortgage applications involving a DMP, what your real options are and how to strengthen your case. This article provides general information only and does not offer regulated mortgage advice.

---

What Is a Debt Management Plan?

A DMP is an informal agreement with creditors to repay debts at an affordable reduced rate. It is not insolvency, but it typically affects your credit file because:

• Accounts are often marked as being in an arrangement
• Many debts show arrears or defaults before entering the plan
• Payments are lower than contractually agreed

How the DMP is reflected on your file influences lender decisions.

---

Can You Get a Mortgage While a DMP Is Active?

Yes — some lenders do allow mortgages during an active DMP, but options are limited.

High-street lenders

Most mainstream lenders decline applications where a DMP is still ongoing. Their criteria usually require:

• All unsecured debts to be up to date
• No recent arrangements to pay
• No active agreements reducing debt payments

Specialist lenders

Some specialist lenders consider active DMPs if:

• Payments are up to date
• There is a clear pattern of financial stability
• Bank statements show controlled spending
• You have a suitable deposit (often 10%–25%)

Interest rates may be higher due to perceived risk.

---

Can You Get a Mortgage After Completing a DMP?

Yes — completing a DMP typically improves your options.

Lenders look at:

1. When the DMP was completed

• Within last 12 months: fewer lender options
• 12–36 months ago: wider selection
• Over 3 years ago: some lenders may treat the case as lower risk, especially if credit has been rebuilt

2. Whether debts are updated on the credit file

All accounts included in the DMP should show:

• Settled
• Satisfied
• Partially settled (if relevant)

Correct reporting matters greatly.

3. Whether adverse credit is ageing

Defaults and arrears remain for six years, but their impact reduces with time.

---

What Lenders Check If You Have or Had a DMP

1. Affordability

Lenders assess:

• Income stability
• Monthly financial commitments
• Whether debts being repaid through the DMP will continue
• Whether affordability improves after consolidation

A DMP doesn’t automatically fail affordability, but it must be factored in.

---

2. Bank Statement Conduct

This is one of the most important areas.

Underwriters look for:

• No unarranged overdrafts
• No returned direct debits
• Predictable, consistent spending
• Evidence of budgeting
• Stable income

Strong bank conduct can outweigh older credit issues.

---

3. Credit File Behaviour

Lenders check:

• Any missed payments
• How long ago defaults occurred
• Whether all debts are now marked correctly
• Whether new credit has been taken out recently

Good recent conduct is essential.

---

4. Deposit Size

Deposit requirements vary:

• 5% deposit: usually not possible with an active or recently completed DMP
• 10% deposit: limited options
• 15–20% deposit: significantly stronger position
• 25%+ deposit: many specialist lenders become accessible

A larger deposit reduces risk and widens choice.

---

5. Stability of Employment and Income

Lenders prefer:

• Consistent employment
• Reliable income patterns
• No major instability in recent months

---

How to Improve Your Chances of Getting a Mortgage with a DMP

(General Information Only)

1. Build at Least 6–12 Months of Clean Conduct

Lenders heavily weight your most recent financial behaviour.

---

2. Update All Credit Files

Ensure all three agencies reflect:

• Correct payment history
• Settled status for DMP debts
• No open “arrangement” markers if the DMP is completed

---

3. Reduce Credit Utilisation

Keeping credit card balances lower helps improve your profile.

---

4. Avoid New Borrowing

New credit can raise risk concerns and reduce affordability.

---

5. Prepare a Clear Explanation

A short, factual explanation helps underwriters understand:

• Why the DMP was needed
• How circumstances improved
• What steps you’ve taken to manage finances responsibly

---

6. Strengthen Your Deposit

A higher deposit provides more lender flexibility.

---

7. Ensure Bank Statements Reflect Stability

Underwriters prefer:

• No overdraft reliance
• No returned payments
• Controlled spending

---

Common Scenarios and How Lenders Respond

Scenario 1: Active DMP but all payments up to date

Options exist with specialist lenders, especially with a larger deposit.

---

Scenario 2: DMP completed 2 years ago

Many lenders may consider this with strong recent credit conduct.

---

Scenario 3: DMP completed but defaults still appear

This is normal — lenders focus on the age and settlement status of the defaults.

---

Scenario 4: DMP included only small debts

Some lenders may view this more favourably.

---

Scenario 5: Recent missed payments after DMP completion

This will significantly reduce options until a stable conduct period is established.

---

Summary

You can get a mortgage with a Debt Management Plan, whether active or completed, but lender policies vary widely. Approval depends on:

• Deposit size
• Recency and severity of debt issues
• Bank statement conduct
• Income stability
• How well your credit file is maintained
• Whether the DMP is active or completed

With clear documentation and strong recent behaviour, many borrowers secure mortgages even with a DMP on their record.

This article provides general information only. For personalised guidance, regulated mortgage advice is required.