Buying your first home is a huge milestone. For many people, it represents stability, security, and a sense of progress. When debt is part of your life, though, that goal can feel distant or even impossible. Worrying about money has a way of shrinking your future plans until all you can see is the next bill.
The important thing to understand is that being in debt now does not mean your chances of owning a home are gone forever. There are debt solutions designed for different situations, and while some make getting a mortgage difficult in the short term, they do not close the door permanently.
This guide explains how a Debt Relief Order works, whether you can get a mortgage with a DRO, and what options exist if you already own a home.
What is a Debt Relief Order?
A Debt Relief Order, often shortened to DRO, is a debt solution designed for people who have a very low income, little or no spare money each month, and no valuable assets.
A DRO freezes your qualifying debts for 12 months. During that time, you do not make payments towards those debts, and creditors are not allowed to chase you. The idea is to give you breathing space to see whether your financial situation improves.
If, at the end of the 12 months, your circumstances have not improved and you still cannot afford to pay, the debts included in the DRO are written off.
Who is a DRO designed for?
A DRO is aimed at people who have no realistic way of repaying their debts. To be approved, you must show that you are genuinely unable to pay what you owe and that your situation is unlikely to change in the near future.
Because debts can be written off entirely, the eligibility rules are strict. You must have low surplus income after essential bills and must not own assets or property that could be used to repay creditors.
This is why entering a DRO has a serious impact on your financial life, both during the order and afterwards.
Can you get a mortgage while you are in a DRO?
In simple terms, no. You cannot have a mortgage when you enter a Debt Relief Order, and it is almost impossible to take one out while the DRO is active.
One of the conditions of qualifying for a DRO is that you do not own property and do not have access to equity or valuable assets. If you did, creditors would expect those assets to be used to repay the debts instead.
A DRO is also intended for people with very limited disposable income. Lenders will not offer a mortgage to someone who has formally declared that they cannot afford to repay their existing debts.
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Start my enquiryWhat about getting a mortgage after a DRO?
A DRO only lasts for 12 months, which is relatively short compared to other debt solutions. Once it has ended, you are free to apply for a mortgage.
However, this does not mean lenders will immediately say yes. A DRO will appear on your credit file for six years from the start date. During that time, lenders can see that you have had serious financial difficulty in the past.
Because of this, many people find it difficult to get accepted straight away. Interest rates may be higher, deposits may need to be larger, and options may be limited.
In most cases, the sensible approach is to give yourself time after the DRO ends. Rebuilding your credit profile, showing stable income, and managing your finances well can significantly improve your chances later on.
Why waiting can work in your favour
Mortgage lenders care about patterns of behaviour. They want to see stability, consistency, and evidence that past problems are behind you.
Waiting a year or two after a DRO gives you time to rebuild trust. During that period, you can focus on paying bills on time, keeping credit usage low, and avoiding missed payments.
Although the DRO remains on your file, its impact reduces over time. As it gets older and your recent history improves, lenders are more likely to consider your application.
What if you already have a mortgage?
If you already own a home, you cannot apply for a Debt Relief Order, even if your property is in negative equity.
This is because home ownership changes how creditors and advisers view your situation. If you own property, creditors may expect you to consider downsizing, remortgaging, or using equity to repay debts, even if that equity is limited.
A DRO is designed for people with no assets at all. Owning a home means other debt solutions are more appropriate.
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Debt options for homeowners
If you have a mortgage and are struggling with unsecured debts, there are other solutions that can help without automatically putting your home at risk.
Individual Voluntary Arrangement
An Individual Voluntary Arrangement, or IVA, is a formal agreement between you and your creditors. You make one affordable monthly payment, usually over five or six years.
Interest and charges are frozen, and creditors included in the IVA cannot chase you. Once the arrangement is completed, any remaining debt is written off.
You are not required to sell your home in an IVA. In some cases, you may be asked to try to release equity near the end of the arrangement, but this depends on affordability and the amount of equity available.
Debt Management Plan
A Debt Management Plan is an informal arrangement where you agree to reduced payments with your creditors based on what you can afford.
DMPs are flexible and not legally binding. Creditors are not required to accept the plan or freeze interest, and they can change their approach at any time.
For homeowners, a DMP can be useful where income is stable and debts are manageable, but it can take a long time to clear balances in full.
Trust Deed in Scotland
A Trust Deed is the Scottish equivalent of an IVA. It works in a similar way, with one affordable monthly payment and protection from creditor action.
Trust Deeds usually last four to five years. Interest and charges are frozen, and the remaining debt is written off at the end if the arrangement is completed successfully.
As with an IVA, you are not asked to sell your home, although equity may be reviewed depending on circumstances.
Choosing the right option for your situation
Debt solutions are not one size fits all. The right option depends on your income, assets, long-term plans, and whether home ownership is part of your future.
A DRO can be a lifeline for someone with no assets and no realistic way to repay their debts. For homeowners or those hoping to buy soon, other options may make more sense.
The key is understanding how each solution affects your future, not just your current stress levels.
Getting support and advice
When debt is weighing you down, it is easy to feel like your options are narrowing. In reality, there are often more routes forward than you first realise.
Speaking to a professional adviser can help you understand what is realistic, what to expect, and how to protect your long-term goals. With the right plan, it is possible to deal with debt today without giving up on home ownership tomorrow.
