Can I get a debt management plan with a mortgage?

30 April2021

The simple answer to this question is yes, you can get a debt management plan if you have a mortgage. In fact, debt management plans are designed to help you keep up with payments to your mortgage provider and other essential costs.

Some other debt solutions can have an impact on your property. For example:

A debt management plan, on the other hand, won't directly affect your property - as long as you keep up with your mortgage payments, of course!

Debt management might be suitable for you if are currently struggling to afford your monthly unsecured debt repayments - but you would be able to keep up with regular payments if they were smaller.

How does debt management work around my mortgage?

Although debt management cannot actively help you with your mortgage - as it only deals with unsecured debts - the process is designed to ensure that you can continue to pay your mortgage.

The first step is to figure out how much money you have left over each month after 'essential' expenses. This includes costs like your rent or mortgage, food, petrol and bills.

If you are on a professional debt management plan (as opposed to organising one yourself) an expert will help you calculate how much, on average, you have left over per month. From this figure, you will calculate how much you can afford to give your lenders in order to repay your debts more slowly, over a longer period of time.

If your lenders accept this new payment, your debt management plan will go ahead. They may also agree to freeze any interest and charges on your debts.

This means that because you only pay as much as you can afford after your essential expenses, monthly payments like your mortgage will not be interfered with. You should be able to make your mortgage payments as well as your more manageable monthly debt repayment (which will be shared out among your lenders).

What are the drawbacks?

Making smaller payments than you originally agreed with your lenders can negatively affect your credit rating. If your lenders don't agree to freeze your interest, you could end up paying more in interest - as you will be repaying the debt over a longer period of time.

If your circumstances change - for example, if your income drops (or rises) - your debt management representative may be able to arrange lower (or higher) payments with your lenders, to keep your plan affordable and get your debts paid off as soon as realistically possible.

Click here to find out more about debt management.

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Tags: debt, debt management, debt management plans, DIY, professional, DIY debt management, mortgage, debt management mortgage, mortgage arrears, repay mortgage, remortgage, equity, release equity

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