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What happens to my mortgage on a debt management plan?

Posted 22 May 2013

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For homeowners, mortgage payments are right at the top of the priority list. So if you're thinking of starting a debt management plan, you'll want to know .

They say the first step in dealing with a problem is admitting to yourself that you've got one.

That's as true with debt as it is with anything else. Once you've realised you need help with your debts, the next step is finding out what kind of help you need.

There's a lot of information available online, but it's no substitute for talking to a debt adviser who can tell you about different debt solutions and how they'd affect you.

I'm a homeowner

If you're a homeowner, one of your main questions will probably be about your mortgage. So if you've been looking into debt management plans, you'll want to know how starting one would affect your mortgage.

How will it affect my mortgage payments?

A debt management plan won't have any direct impact on your mortgage payments. It's designed to help you repay your unsecured debts (credit cards, personal loans, overdrafts, etc.). When you start a plan, it's very important you keep on paying for your mortgage yourself.

The good news is: your plan should make that easier to do. It should bring your unsecured debt payments down to a level that leaves you with enough for all your essential costs, including food, utility bills, clothing - and your mortgage payments.

What if I want to get a new mortgage?

If you're on a debt management plan, your credit rating will be affected, since you're not repaying your debts the way you agreed to when you borrowed the money.

So if you apply for a new mortgage while it's on your credit record, this will be a factor. It could mean you have to pay a higher interest rate, or that you can't get a new mortgage deal at all.

Even so, debt management plans are only for people who can't afford their monthly debt payments. If you're already in that situation, there might be no way to keep your credit rating intact - and if you don't get some professional help with your debts, the consequences could be much worse.

To talk to one of our experts, just call 0161 605 4810, or fill in the form on this page and we'll call you back.

by Sarah Symons

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To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.