If you're a homeowner, one of your key concerns is probably about being able to pay your mortgage and keep your home. And if you've been looking into Debt Management Plans, you'll want to know how starting one can affect it.
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 maintain your priority payments such as your mortgage or council tax yourself. The good news is that your plan will make that easier to do. It will bring your unsecured debt payments down to a level that leaves you with enough for all your essential costs, including your rent or mortgage, food, utility bills, and travel costs.
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 you’re on a Plan, the missed, late or reduced payments will be a deciding factor, as they’ll impact on your credit rating. It could mean you have to pay a higher interest rate, or that you may struggle to get a new mortgage deal at all.