Debt relief orders and mortgages

There are very strict eligibility criteria for a DRO, including not having a mortgage or owning a house. 

As you’re not eligible for a DRO if you have a mortgage, you won’t be able to take out a mortgage during your DRO. If your situation improves during the 12-month moratorium, you should let the official receiver know. They’ll tell you whether your DRO can continue. 

If your situation doesn’t improve during the 12 months, your debts will be written off and then you can start thinking aboutrebuilding your credit score.

Even though your DRO ends after 12 months, it will stay on your credit report for six years. You can check your credit score with one of the three credit reference agencies: Experian, Equifax and TransUnion.

While the DRO is on your credit file, your score will remain low and you’ll probably find it difficult to borrow from mainstream lenders. This is because you’ll be viewed as a high-risk customer as you’ve struggled to repay debts in the past. 

Bad credit mortgages do exist but could lead to further money struggles due to higher costs. You’re likely to need a much larger deposit than someone without a DRO on their credit file and you’ll also face higher interest rates. Seek professional advice if you’re considering a bad credit mortgage.  

Even after the DRO falls off your credit file, you’ll need to rebuild your score before you get access to more competitive mortgage deals. 

Rebuilding your credit rating will take time but it can be done by managing your money well. As your score improves, you’re likely to find more lenders willing to offer you credit at more competitive rates.