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    • kelvin.willis
    • By kelvin.willis 8th Sep 17, 11:49 AM
    • 5Posts
    • 1Thanks
    kelvin.willis
    Should I sell my house to pay off debts?
    • #1
    • 8th Sep 17, 11:49 AM
    Should I sell my house to pay off debts? 8th Sep 17 at 11:49 AM
    After some advice...

    I have currently accrued approx £16,000 of debts on credit cards.

    I have approx £45k - £50k of equity in my property.

    I am thinking of selling this house and purchasing one for approx £22k less, therefore giving me money to settle the credit cards and use the remainder for the purchase and selling (calculations show this is doable).

    My question is, is this a good idea, and what impact will having these debts have on any mortgage application? I am with halifax and know that for others they have put a clause in that the debts must be paid off once the house sale has gone through - is this still the case?

    Online calculators with the debts would not allow me to purchase a property even at a lesser value, but is more than enough without the debts (which there would be zero if i downsized).

    Any advice greatly appreciated.
Page 1
  • National Debtline
    • #2
    • 8th Sep 17, 12:34 PM
    • #2
    • 8th Sep 17, 12:34 PM
    Hi Kelvin

    Welcome to MSE. The first question I would ask is whether you want to sell your house? Even if the credit cards are not affordable, they have limited powers that don’t put your home directly at risk. You may have a number of options to deal with them without selling up. If that is something you would like advice on I recommend posting a statement of affairs (SOA) so other members of the board can offer you advice http://www.stoozing.com/calculator/soa.php.

    If you do decide downsizing is your best option then it’s possible the debts could affect your mortgage application, particularly if you have any defaults or CCJs. I’m unsure about the clause to pay off your debts, but presumably if that’s what you intend to do it shouldn’t be a problem. It’s certainly a good idea to speak to a mortgage broker before applying.

    Susie
    @natdebtline
    We work as money advisers for National Debtline and have specific permission from MSE to post to try to help those in debt. Read more information on National Debtline in MSE's Debt Problems: What to do and where to get help guide. If you find you're struggling with debt and need further help try our online advice tool My Money Steps
    • kelvin.willis
    • By kelvin.willis 8th Sep 17, 1:01 PM
    • 5 Posts
    • 1 Thanks
    kelvin.willis
    • #3
    • 8th Sep 17, 1:01 PM
    • #3
    • 8th Sep 17, 1:01 PM
    Thank you for the reply. It was always my intention to move, and luckily the area I like has cheaper properties.

    The main query was regarding the effect on porting the mortgage, but I shall arrange to speak to my mortgage provider.

    No CCJ's or defaults and repayments are all within budget and on 0% balance transfers, but I hate having the debt round my neck and would like a fresh start.

    I did apply for a consolidation loan a few weeks ago and was rejected, but they said that was because I had a lot of outstanding debt (they didnt take into account the loan was to pay those debts off).
    • lynz68
    • By lynz68 8th Sep 17, 1:35 PM
    • 312 Posts
    • 291 Thanks
    lynz68
    • #4
    • 8th Sep 17, 1:35 PM
    • #4
    • 8th Sep 17, 1:35 PM
    For me selling your home to pay of debt is a bit extreme but if you were planning to move anyway fair enough.

    Regarding the loan you were turned down for all lenders will take into account your current debt as they can't guarantee you will pay it off.

    Current debt will also affect the amount you can borrow for your new home it's all about affordability.

    You will also need to tackle the reason you got into debt or you may end up in the same situation again.
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