Personal debt in the UK also increased to £1.68 trillion at the end of January 2020, which is an increase of £48.7 billion compared to January 2019 according to the Money Charity.

This equates to an extra £923 per adult in the UK over the last year.

So, what could this mean for you as a broker?

With a rise in debt in the UK, the number of people seeking support from DMP companies could also be on the increase.

In our most recent Adverse Credit Study, we found that 9% of respondents who experienced in the last 3 years adverse credit had entered into a Debt Management Plan at any point in their lives.

And, with 82% of StepChange clients currently rental tenants, this clearly illustrates that there will be potential customers looking to get on the property ladder when their financial circumstances improve.

When it comes to mortgages, you may not always be able to see whether your client is, or was, in a DMP.

This is because DMP providers don’t always register the DMP on their clients’ credit file.

As a broker, it’s important to select the most appropriate mortgage for your client based on their financial situation.

But how can you do this if your client’s DMP hasn’t been registered?

Is your client in a DMP?

Here are a few steps you could take to identify whether your client is, or was, in a DMP:

• When looking at your client’s bank statements, see if there are any regular Direct Debits or standing orders to a DMP provider
• If you spot a pattern of regular payments to a company you don’t recognise, a quick internet search could help find out whether it’s a DMP provider
• Establish how long the plan has been in place and whether regular payments have successfully been made to the DMP company.

If you do identify that you client is, or was in a DMP, it’s very important to have an open conversation with them. Acknowledge that this may be difficult to talk about, let them know that you discovered this, but do explain that being open with you and lenders is always the best policy.

Try to get as many of the facts as possible from your client, including the story and reasons behind entering the DMP, as this make all the difference when a lender’s underwriter assesses the case.

Having a client who is, or was, in a DMP doesn’t necessarily mean they may not be able to get a mortgage. There are lenders that provide mortgages in this situation providing that regular payments have been met.

If your client is or has been in a DMP, we may be able to help them the mortgage that they perhaps didn’t even expect to get.

Check out our Residential DMP product range, or to talk through your client’s situation in more detail to see if we could help, please call our experienced sales team on 03333 701 101.

Pepper Money Adverse Credit Study