Debt Management Plan

Posted on 17 March 2012 by Paul

I am currently in the process of saving towards a 15-20% deposit on a house valued at around £165k.

It will be a joint mortgage application but whereas my partner has a perfect credit history, mine is somewhat poor. I was on a debt management plan having defaulted on my loans and credit cards. These are fairly old defaults which date back from 2006 to 2008 - they remained defaulted whilst I made payments on the debt management program. However, I have now either fully settled or paritially settled all of my debt, with the last one being fully settled this month.

Bearing in mind that I am now debt free, and the majority of defaults should drop off my credit file next year - how successful do you think we would when applying for a joint mortgage?

Ideally I could wait until the end of next year when most of those defaults are gone, but there would still be a couple defaults left with the last one not due to drop off until the middle of 2014.

Any help would be greatly appreciated!


It would be possible for you to get a mortgage now, but I wouldn't recommend it.  With a 20% deposit you could obtain a fixed rate of circa 6.09% or a tracker of 5.88%, both for 2 years and with a fee of £1995.  Compare this with the current best buys of 3.18% and 2.99%, both for 2 years with a fee of £999 and you can see how much you are being punished for your credit record.

I think you would be better off waiting until the earliest defaults drop off your credit file and using the time in between now and then to build up your deposit to as near to 25% as you can and maintaining a clean credit record.  If you have a credit card or similar that you can use and clear each month this would go along way to re-establishing your credit rating.

Of course if you find yourself in the position of wanting to apply earlier than this John Charcol will be able to help find the right mortgage and you should call 0344 346 3672 and speak to one of our independent mortgage advisers.


Many Thanks.

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