Getting a Mortgage with a Debt Management Plan

A Debt Management Plan (DMP) is an informal arrangement to repay your debts at a reduced rate, and it can affect your ability to get a mortgage. However, having a DMP — whether active or completed — does not automatically disqualify you from securing mortgage lending. Specialist lenders understand that a DMP is often a responsible step taken to manage unaffordable debts, and some will consider your application based on your broader financial picture.

For a wider look at how adverse credit affects mortgage applications, see our complete guide to bad credit mortgages.

What is a debt management plan and how does it affect your credit?

A DMP is an informal agreement to repay your debts at a reduced rate — it does not appear as a separate entry on your credit file, but the reduced or missed payments that result from it will be visible to lenders for six years. Under a DMP, usually arranged through a debt management company or a free debt charity such as StepChange, you make a single monthly payment to the DMP provider, who then distributes the funds to your creditors on your behalf, typically at a reduced amount.

Unlike an IVA or bankruptcy, a DMP is not a formal insolvency procedure. It is not legally binding, which means creditors are not obliged to accept the reduced payments, and they can still take enforcement action. However, most creditors will cooperate with a reasonable DMP arrangement.

A DMP itself does not appear as a separate entry on your credit file. However, the reduced payments you make through the DMP will typically be recorded as partial payments or missed payments by your creditors, which does appear on your credit file. Additionally, if any accounts were defaulted before or during the DMP, those defaults will show for six years.

Can you get a mortgage while you are still on a DMP?

Yes, it is possible but challenging — most mainstream lenders will decline, so you will need a specialist lender, a deposit of at least 15–20%, and your DMP payments will reduce what you can borrow. Here are the key considerations:

• Affordability impact: Your DMP payments will be included in the lender's affordability assessment, reducing the amount you can borrow. Lenders need to be satisfied that you can manage both the DMP payments and the mortgage repayments.
• Limited lender options: Most mainstream lenders will decline applications from borrowers on active DMPs. Specialist lenders are more flexible, but choices are still limited compared to post-DMP applicants.
• Credit file impact: If your DMP has resulted in defaults, missed payments, or reduced payment markers on your credit file, these will all be visible to mortgage lenders.
• Larger deposit needed: You will typically need a deposit of at least 15–20% while on an active DMP, and potentially more depending on the severity of associated credit issues.

How soon after completing a DMP can you get a mortgage?

Some specialist lenders will consider your application immediately after DMP completion, with your options improving significantly as the associated credit marks age. The credit marks associated with the DMP (missed payments, defaults, partial payments) will still be visible on your credit file for six years from when they were registered, but their impact lessens over time.

The key to maximising your options after completing a DMP is demonstrating a pattern of improved financial management. Lenders want to see that the circumstances that led to the DMP are behind you and that you are now managing your finances responsibly.

Is a DMP better or worse than an IVA or bankruptcy for getting a mortgage?

A DMP is generally viewed more favourably than an IVA or bankruptcy because it is informal, does not appear on the Insolvency Register, and demonstrates a proactive approach to debt management. Here is how it compares to other solutions:

• DMP vs defaults alone: A DMP often accompanies defaults, so the credit file impact may be similar. However, having taken steps to manage your debts through a plan can be viewed positively by some lenders.
• DMP vs IVA: An IVA is a formal insolvency event recorded on the Insolvency Register, making it more impactful on your mortgage options than a DMP. Read more about getting a mortgage with an IVA.
• DMP vs bankruptcy: Bankruptcy is the most severe insolvency event and has the greatest impact on mortgage options. See our guide on getting a mortgage after bankruptcy.
• DMP vs CCJs: If your DMP debts escalated to CCJs, those are an additional complication. Read our guide on getting a mortgage with a CCJ.

How can you improve your chances of getting a mortgage with a DMP?

1. 01

   Complete your DMP if possible before applying

   Finishing your DMP removes the ongoing payments from your affordability calculation and signals to lenders that you have dealt with your debts. If you are close to completion, it may be worth waiting.

2. 02

   Check your credit reports in detail

   Review reports from Experian, Equifax, and TransUnion. Ensure all accounts from your DMP are correctly recorded. If debts have been repaid in full, check they are marked as satisfied. Dispute any inaccuracies.

3. 03

   Build a positive credit history going forward

   Use a credit-builder card responsibly, paying the full balance monthly. Register on the electoral roll. Keep any existing credit accounts in good standing. These actions rebuild your credit profile.

4. 04

   Save a meaningful deposit

   A deposit of at least 15% gives you access to a reasonable range of specialist lenders. If you can stretch to 20%, your options and rates improve further. Use the time to save while your credit history improves.

5. 05

   Prepare documentation about your DMP

   Have details of your DMP provider, the debts included, when it started and ended, and your completion confirmation ready. Some lenders or brokers will want this information when assessing your application.

6. 06

   Consult a specialist mortgage broker

   A broker experienced in adverse credit applications will understand how different lenders treat DMPs and can identify the best option for your specific circumstances. This is particularly important because DMP cases can be nuanced.

What interest rates and terms should you expect with a DMP?

Expect to pay around 1–4% above mainstream rates, depending on whether your DMP is active or completed and how old the associated credit marks are. Your deposit and the specific lender also play a role. Generally:

• Completed DMP, credit marks over 3 years old: You may be close to near-prime rates, particularly with a 15–20% deposit and a clean record since. Rates might be 1–2% above mainstream.
• Completed DMP, credit marks 1–3 years old: Expect specialist rates of around 2–3% above mainstream, with a wider range of lender options available.
• Active DMP: Rates will be at the higher end of the specialist range, typically 3–4% above mainstream, with limited lender choice.

As with other adverse credit situations, plan to remortgage to a better deal once your credit position has improved — typically two to three years after taking out the initial mortgage. Use our mortgage calculator to compare repayments at different rates.