Q I’m 46 and dwell in a small two-bedroom home with my two youngsters however I would like one thing greater. I owe about £96,000 on the mortgage but in addition have one other secured mortgage of £38,000 (which is what it might value to repay it so contains early redemption charges and so forth). The home is valued at about £165,000, so I do have some fairness in it. Nevertheless, my actual drawback is that I’m additionally on a debt administration plan of about £13,000, which has been going for lower than a 12 months. If I bought my home and paid off the whole lot, I might have £18,000 to place in the direction of a much bigger home. However my query is: would I be capable of get the larger mortgage that I would want?
Is there any hope? I used to be additionally questioning whether or not I ought to promote up and lease for some time earlier than attempting to get one other mortgage. Or has my credit score historical past scuppered any possibilities of shopping for a much bigger place?
A Sure there’s a very modest quantity of hope however it should contain a little bit of a wait and the usage of a specialist mortgage dealer. In keeping with Pete Mugleston, of onlinemortgageadvisor.co.uk, “You will get a mortgage with a debt administration plan (DMP) nevertheless it very a lot will depend on your private circumstances. One of the crucial vital issues that lenders will take a look at is whether or not or not the DMP is energetic and, if not, how way back it was glad.
“If you’re at present managing money owed as a part of a DMP, then your choices are going to be much more restricted… as nearly all of lenders, particularly excessive avenue banks, gained’t take into account an unhappy DMP.”
These lenders that can take into account mortgage functions from individuals with energetic DMPs will often require your energetic DMP to have been in place for at the least 12 months and to have been managed responsibly.
However even when you wait till your DMP has been in place and well-managed for 12 months, the probability of you getting a much bigger mortgage are slim. That’s as a result of probably the most you would possibly be capable of borrow is 75% of the worth (not the identical as the acquisition value) of a brand new property. With a money deposit of £18,000, that will imply a complete property worth of £72,000 with a most mortgage of £54,000. The utmost mortgage can be even smaller if a part of the £18,000 must be used to pay authorized and different charges.