Can I Get a Mortgage With a Trust Deed?

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A Trust Deed is an arrangement between you and your creditors to pay off your unsecured debt. Trust Deeds are sometimes referred to as a ‘Scottish IVA’ (IVA meaning Individual Voluntary Arrangement) as they’re not available in other parts of the UK. There are stark differences between them however. For example, Trust Deeds aren’t authorised and regulated by the Financial Conduct Authority (FCA), rather by a number of different professional bodies.

Similarly to if you were in an IVA, you may still be able to get a mortgage with the help of a broker. Although on account of the high prices and interest rates, it may be difficult to do so.

Furthermore, in a Trust Deed, any savings to your name will normally be paid to your creditors. This means that on top of your regular payment, it may be hard to save for a deposit.

What does a Trust Deed involve?

Trust Deeds involve paying off part of your debt over the course of at least 4 years. You’ll have to inform an insolvency practitioner of your income and assets. They will then use this to form a plan of repayment with your creditors on your behalf.

Protected Trust Deeds

After your plan has been agreed by your creditors, it will become ‘protected’. Once in a Protected Trust Deed:

Your creditors will no longer be able to chase you for your debt, giving you that all-important peace of mind when dealing with debt.
They will also be unable to add any interest or charges, provided you keep up with the terms of your Trust Deed.

Will a Trust Deed affect my chances of getting a mortgage?

The short answer is yes – it will. Whilst in a Trust Deed, credit reference agencies will be informed of your circumstances which may make them less inclined to loan you money. One option for you if you still want to apply for a mortgage with a Trust Deed is to seek the advice of a mortgage broker.

Mortgage brokers have access to a wider variety of lenders, whose rates may be more accessible to someone in such circumstances. Bear in mind that these may difficult to afford due to high levels of interest. You will also need to get permission from your Insolvency Practitioner before withdrawing any more credit.

Can I get a mortgage after a Trust Deed?

Many worry about potential financial difficulties after a debt solution. They fear that a poor credit history may harm their future chances to borrow money should they need to. Admittedly, your credit score may initially work against you should you want obtain a mortgage. Don’t worry though, there are steps you can take to regain a good credit score following a Trust Deed.

How can I improve my credit score after a Trust Deed?

It may seem counter-productive, but one of the first things you should do following debt settlement is to begin using credit again. It doesn’t have to be a huge amount; even just regular payments to cover the minimum each month are enough to start repairing your credit score. These regular payments should not only apply to your credit accounts however.

It’s also important to make sure all your other bills are paid off in a timely manner (electricity/gas bills for example). Doing so will reflect positively on you when credit reference agencies come to recalculate your credit rating.

Debt Arrangement Schemes

Another debt solution specifically for Scottish residents is a Debt Arrangement Scheme (DAS), which allows you to pay off your debts in monthly instalments. The main difference between the two is that in a DAS you will not be made insolvent. This means your assets will usually be protected.

Your home will also be safe, provided you keep up-to-date with your mortgage repayments.

Get in touch today

For more information regarding Trust Deeds or other Scottish debt solutions, get in touch with PayPlan today.

We have a range of solutions for individuals all over the UK, so if you’re struggling, don’t hesitate to give us a call on 0800 316 1833 . Alternatively fill in our free Debt Help form.