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  • FIRST POST
    • Shcjap82
    • By Shcjap82 5th Oct 17, 8:10 PM
    • 1Posts
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    Shcjap82
    Selling house to clear credit cards?
    • #1
    • 5th Oct 17, 8:10 PM
    Selling house to clear credit cards? 5th Oct 17 at 8:10 PM
    Hi, so we've managed to rack up around 18,000 of credit card debt between two cards (10k on a 0% card). We have 22k equity in our property and have an offer on it to sell, considering renting for 2 years and clearing the cards. Any advice on this please. Although rent is around 200 a month more than our mortgage so it seems a bit of a catch 22 situation? Thank you
Page 1
    • binaryuniverse
    • By binaryuniverse 5th Oct 17, 8:20 PM
    • 475 Posts
    • 262 Thanks
    binaryuniverse
    • #2
    • 5th Oct 17, 8:20 PM
    • #2
    • 5th Oct 17, 8:20 PM
    Good god no.

    If possible take out 0% balance transfer cards, and shift as much as you can to those, so you are paying off the debt, rather than servicing the interest.

    Next thing you can do is speak to your credit card providers and explain your situation. Get interest reduced where possible. Maybe ask to have interest frozen, and/or lower payments. Note, interest freezing and lower payments may show as an 'arrangement to pay' on your credit file, which will affect your ability to get credit in future.


    At worst, default on the cards. Sure the amount will go up, as they whack on a load of fees and charges on them. But, after that, the total won't go up further, so it's effectively debt at 0%. You'll also probably be able to agree lower monthly repayments with a debt collector, than you currently pay on your cards. Which may make it more manageable.

    But never consider selling the roof over your head to pay that debt off.

    And find out why your debts are so high, and start looking at how you spend, to work out how you got in to this position in the first place.
    • bris
    • By bris 5th Oct 17, 8:47 PM
    • 7,096 Posts
    • 6,111 Thanks
    bris
    • #3
    • 5th Oct 17, 8:47 PM
    • #3
    • 5th Oct 17, 8:47 PM
    And when will you ever get the chance to buy again? With selling fees etc you will be potless after clearing the credit cards so getting the deposit together to buy agin somewhere down the line will be very, very difficult for you.


    What's even scarier is the fact you know renting will be 200 dearer which can go towards the debt, but that extra 200 will be forever.


    Get o% cards if you can, get cheaper personal loans if you can but don't sell your house, you will regret it 6 months from now.
    • jonesMUFCforever
    • By jonesMUFCforever 5th Oct 17, 10:33 PM
    • 24,254 Posts
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    jonesMUFCforever
    • #4
    • 5th Oct 17, 10:33 PM
    • #4
    • 5th Oct 17, 10:33 PM
    Whilst I agree that generally speaking that buying is always better than renting - in this case the rent is 200 more but they will save in other areas - any repairs should be borne by the landlord - no buildings insurance will be required etc.
    What goes around - comes around
    give lots and you will always receive lots
    • PasturesNew
    • By PasturesNew 5th Oct 17, 10:37 PM
    • 60,980 Posts
    • 356,177 Thanks
    PasturesNew
    • #5
    • 5th Oct 17, 10:37 PM
    • #5
    • 5th Oct 17, 10:37 PM
    No, no, no, no, no.

    For starters, selling/buying would cost you more than the current debt.
    Secondly, house prices might go up in the meantime, leaving you "behind the game".
    Thirdly, it'll do your mental health no good at all when you realise the two above.
    The fees/hurdles alone in renting will make your eyes water!
    The whole house/mortgage/credit rating game's too harsh nowadays, you can't guarantee to get back to where you are now.


    Hunker down. Sell stuff. Get a temporary second job. Do something/anything rather than selling to rent to buy in 2 years. The timescale's too short, the reason's too wrong, the timing's not right, the costs too high.

    When you sell/buy and rent in the middle, there are HUGE sums you just "throw away, never to see again". And for what??

    Just turn the lights off and eat beans and clear all the debts.
    • flower77g
    • By flower77g 5th Oct 17, 11:03 PM
    • 37 Posts
    • 12 Thanks
    flower77g
    • #6
    • 5th Oct 17, 11:03 PM
    • #6
    • 5th Oct 17, 11:03 PM
    Sounds as if iNterest is being paid on 8K of the credit card debt - can you move some of it to a new credit card as a balance transfer ata lower rate? If so it would reduce outgoings.

    The figures are so tight that it might be worth speaking to the existing mortgage lender and asking them if they will let you extend the mortgage term, which will also reduce the monthly outgoings. Not usually a good idea.
    • YorkshireBoy
    • By YorkshireBoy 5th Oct 17, 11:14 PM
    • 29,616 Posts
    • 17,474 Thanks
    YorkshireBoy
    • #7
    • 5th Oct 17, 11:14 PM
    • #7
    • 5th Oct 17, 11:14 PM
    Monthly minimum payments at the moment are circa:

    10K x 1% = 100
    8K x 2.5% = 200
    Total 300

    So you're potentially destroying your future for a saving of 100 per month (plus a few quid on buildings insurance).

    Get a second job. 25 a week stacking shelves, gardening for neighbours and friends, pulling pints, washing cars, anything, for 4-5 hours work would allow you some breathing space.
    • Robin9
    • By Robin9 6th Oct 17, 12:23 AM
    • 1,960 Posts
    • 1,271 Thanks
    Robin9
    • #8
    • 6th Oct 17, 12:23 AM
    • #8
    • 6th Oct 17, 12:23 AM
    No dont do it. Others on this forum have been in a much deeper debt but have managed to turn things around.

    Post your SOA for help and be prepared for a drastic change to your lifestyle.
    Never pay on an estimated bill
    • MEM62
    • By MEM62 6th Oct 17, 9:42 AM
    • 1,394 Posts
    • 1,009 Thanks
    MEM62
    • #9
    • 6th Oct 17, 9:42 AM
    • #9
    • 6th Oct 17, 9:42 AM
    We have 22k equity in our property and have an offer on it to sell, considering renting for 2 years and clearing the cards.
    Originally posted by Shcjap82
    Any advice on this please.
    Originally posted by Shcjap82
    This route to clearing your cards it would probably qualify as the worst financial decision you ever made. I suggest posting on the DFW boards for advice on alternative routes to being debt free.
    • Don80
    • By Don80 10th Oct 17, 11:42 AM
    • 208 Posts
    • 83 Thanks
    Don80
    Absolutely not!

    If you are struggling to pay credit cards, as others have said, look at the debt free boards. If you are paying the minimum off, your credit files will show that you make your payments. The trick is to try and pay more to reduce the balance more quickly.

    Look at your cards, see which has the best rate - cut up the others leaving one for emergency use. Then...

    1. Raid any cash savings you have and put that onto the cards.
    2. If you think you can afford 200 more in rent a month, pay the 200 onto the cards. In an emergency, you would have available credit to use.
    3. Look at balance transfer cards - use the eligibility checker on MSE to see if you can get one and pay that off first. Keep doing this to minimize interest as far as possible.
    4. Could you take a loan to pay off some or all the cards (this could be more expensive so check interest rates first)?

    Do not sell your home to pay off credit cards. I think that would be one of the worst decisions you'd ever make.
    • 5557223
    • By 5557223 10th Oct 17, 1:35 PM
    • 31 Posts
    • 8 Thanks
    5557223
    Exactly what everyone else is saying. Don't sell the house - bad idea. Lots of great suggestions - follow through and you will be much better off in the long run.
    • enthusiasticsaver
    • By enthusiasticsaver 10th Oct 17, 2:07 PM
    • 4,848 Posts
    • 9,155 Thanks
    enthusiasticsaver
    Hi, so we've managed to rack up around 18,000 of credit card debt between two cards (10k on a 0% card). We have 22k equity in our property and have an offer on it to sell, considering renting for 2 years and clearing the cards. Any advice on this please. Although rent is around 200 a month more than our mortgage so it seems a bit of a catch 22 situation? Thank you
    Originally posted by Shcjap82
    You have 18k of debt so presumably you are overspending on living costs unless you have purchased assets with them? 10k is on 0% so making a plan to budget better and repay them is doable depending on your income and outgoings.

    If you sell then by the time you have paid moving expenses, deposit on rental place etc etc and cleared the cards you will have 0 left and have extra outgoings with no security/assets. I would strongly urge you to think again and not do this.

    Go on to the DFW board and post an SOA. Cancel the credit cards, set up a spending diary and budget to live within your means.
    1 week to go until early retirement. Debt free and mortgage free.

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
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