Help! Do I sell or re-mortgage if possible?

dollydimple73 · 16 March 2017 at 11:35AM

We've been in a DMP with Stepchange for 8 years now, with approx another 8 years or so to go. We started with a debt of 54k and are currently around the 30k mark. Our circumstances have improved massively over those years, but we're trapped in this DMP and desperate to get out.

We really don't know what to do for the best. We have a lot of equity in the house, approx 58k but know that if we sell and clear the DMP then our chances of getting another mortgage would be slim for a good few years, so we'd need to rent for a while until we improve our credit files. So do we try and re-mortgage with our current mortgage lender (Halifax) borrow the 30k and clear the DMP or sell up, clear the DMP and rent for a few years? What would you do?

freshcotton · 16 March 2017 at 1:44PM

I wouldn't sell unless you actually wanted to move. Sale and renting costs can quickly add up which is money you can throw towards debts.

If your situation has improved, can't you clear the debts quicker ?

EssexHebridean · 16 March 2017 at 2:02PM

Essentially selling a property you own, and going into rented acommodation, is the same as turning unsecured debt into secured debt - it's to be avoided unless it can't be helped, and it doesn't sound like that is your situation.
Re-mortgaging to clear the debt comes under the same heading by the way - DO NOT DO THIS!! For a start it doesn't "clear" the debt - it just moves it, and I imagine you'll then be paying it off for more than 8 years, won't you?

When did you last re-do your SOA? It sounds like that's the first thing to do - get that done and maybe post it in here for us to help you review, it sounds as though you may ow have additional surplus which can either go to the DMP to shorten the remaining term, or be set aside ready to offer full and finals in due course?

January2015 · 16 March 2017 at 2:16PM

If you are on a DMP hopefully all your debts are on 0% interest now. Why would you want to remortgage and put those debts onto an interest bearing loan that is secured to your home......don't do it. I would never recommend selling your home to pay off unsecured debts either.

You may be fed up with the length of time the DMP is taking, but stick with it - you will get there.

Pop over to the DMP Mutual Support thread - all folk going through the same extended process to clear their debts. We keep each other motivated and help out when queries pop up.

Spatton · 16 March 2017 at 2:37PM

Agree with the advice DO NOT DO THIS

Renting is *not* a cheaper option. Ask any person who rents and wants to buy, one of the biggest issues in getting a toe on the housing ladder is that rent is typically a lot higher than mortgage payments on an equivalent property, so there's never enough left over for saving towards a deposit. Plus there's all the sneaky things like insurance costs being higher for people who rent as insurers see you as a more risky prospect - including car insurance believe it or not.

Totally agree it's soul destroying being stuck paying off debt, but you have your own home which is a lot more than a lot of other people. Plus, you can be turfed out of rental properties with very little notice (ever tried to pack up a house full of belongings and find somewhere else to live in a month), which is much, much harder when it's your home with a mortgage. Oh, and one more irritating thing about renting - landlords can enter their property with minimal notice as well, which always feels like a total invasion of privacy, even though it's perfectly legitimate.

dollydimple73 · 16 March 2017 at 2:55PM

Thank you for the replies. We've just recently had a review of the DMP and upped our payments and are at the maximum we can comfortably afford to pay. We're just busting out of the seems of this house and really want to move but just can't see how it's possible. I really don't want to rent for all the reasons everyone gave. Just a bit fed up of it all I suppose

another_casualty · 16 March 2017 at 3:23PM

Same as above .. don't sell .
Your head is obviously spinning at times , trying to do the right thing .
Don't forget : a dmp iss there to work for you , meaning you can either reduce or increase the amount you pay should unforseen problems arise .

I do have questions though : how do you know how much equity you have in your property ? Has your place been valued ? How much do you have left to pay on mortgage ? Don't forget , some estate agents overvalue how much your place is worth . If you did decide to sell, you could have a nasty surprise . Then you have the condition of your property etc

Best of luck

enthusiasticsaver · 16 March 2017 at 3:26PM

dollydimple73 wrote: »

Thank you for the replies. We've just recently had a review of the DMP and upped our payments and are at the maximum we can comfortably afford to pay. We're just busting out of the seems of this house and really want to move but just can't see how it's possible. I really don't want to rent for all the reasons everyone gave. Just a bit fed up of it all I suppose

Moving in itself is expensive with usually fees of around £5k plus the expense of buying a larger property. If you are on a DMP obviously a new mortgage is out of the question until after this has finished anyway but selling and renting would not be cheaper. Rents tend to be more expensive than mortgages these days.

Upping your payments to clear it quicker as you have done sounds like a better option.

EssexHebridean · 16 March 2017 at 3:29PM

I'd say do the revised SOA anyway - remember what a debt management charity say you can afford, and what you might actually be able to afford are two different things as they won't expect you to make some of the economies that you might be happy to make - they have set guidelines for how much you're "expected" to spend on certain things.

Fireflyaway · 16 March 2017 at 6:07PM

I would say stay where you are and try to increase your repayments .Don't take out more debt to pay off your existing debt.
I am renting having sold up year before last and due to a bad credit file could be doing so for a few more years before we can buy again. Our rent is now £1150 per month. Our mortgage was £580!. Admittedly this house is bigger but its a big difference and having been asked to move on recently as landlord wanted house back I do miss the security of owning. Try to take steps to utalise your space better. You don't know for sure what the housing market will do. Imagine remortgaging then when you want to sell up, the market goes bad and suddenly you have no equity and are stuck for years! That happened to me. I made the mistake of thinking about the situation at that time and not the potential future consequences.

FatVonD · 16 March 2017 at 6:42PM

Absolutely do not sell or remortgage, house prices will most likely continue to increase and you may never get back on the property ladder again.

I agree you need to look at how you are using the space you have. Clear out (and sell!) as much clutter as you can, invest in a shed if you must to store out of season clothes etc in bin bags (or put them in the loft.) Clear out all the kitchen equipment that only gets used rarely, if it has a layer of dust on it then out it goes! As the saying goes, keep nothing in your home that isn't beautiful or useful!

Rethink how you are using the rooms you have, would swapping bedrooms around help (there's no law that says the 'grown ups' have to have the biggest bedroom if you have several kids squeezed into a smaller one for instance.)

Help! Do I sell or re-mortgage if possible?

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