Should we sell our house to pay off debt?

bubblyboo

Hi

My husband recently revealed that we are in a lot of debt – to be precise £33k. This consists of the following:

• £9k over 2 MBNA credit cards (we are currently paying £200 minimum balance on these p/m as they put the APR up to 38.9% when we didn’t receive a letter informing us of change of pymt date. I have written them a letter requesting they restore the original APR. Here’s hoping)
• £12k homeowner loan (I knew about this one as I had to sign for it at the time) We are currently paying £105 on this per month & will be for the following 20, yes 20 years.
• £8k personal loan – we pay £185 p/m on this for the next 3 years.
• Other credit cards £4k

I became a mum in 2007 and so am only working part time now on a self employed basis. My husband has also only recently gone self employed.

I am earning circa £500 p/m and my husband £1.1k per month. So in total, we’re just managing to keep our head above the water.

We live in a shared ownership property (50% share) and have about £20-£25k equity in our home. We are currently considering selling our house, moving in with my parents-in-law for a couple of months to save some money and then getting a new mortgage. We would pay off some debt. My only concern is that with us both being self-employed and the current credit crunch, we may not get a mortgage very easily & wonder if we would ever get on the ladder again!

Any advice is welcome!

Thanks

robin_banks

It's an almost given you won't get any mortgage being 30k in debt for now and the next few years.

Speak to the HA, get it valued and make your decision form there, but bear in mind the longer you leave it the less equity you have, also shared ownership properties are a nightmare to sell.

immoral_angeluk

With the current economic climate it isn't going to be as straight forward as you think with selling your house. Mainly, as you're in a shared ownership scheme so you would have to get the written permission of the other owner before you can do anything and you will find it MUCH harder to sell your home with it being shared ownership. Also it is very unlikely you will get full market value if you do even manage to sell it, which will obviously then eat into your equity which doesn't cover your debt as it is.
You would be much better off looking at other avenues first such as contacting the CCCS, CAB or payplan and looking into DMPs/IVAs and leave selling the house until a very last resort.

Darth_Marty

I would say look into other options before thinking of selling. Unless you are at risk of losing your home its always going to be a big asset. Only as a last resort I would advise you go down this route.

RAS

Hi

Please contact one of th debt charities listed here http://www.moneysavingexpert.com/loans/debt-help-plan#help

And perhaps you need to think very carefully about the sense in OH being self-emplyed? If he can earn more than he is currently raising (assuming you have made provision for tax etc), he would be wise to go back into employment.

You also need to do a SOA, so you can work out why you have over £20K worth of debt in recent years.

mummy2mygirls

Im no expert as you can see from my sig.....just had my lbm last mth so was a shock to see exactly what we owe!
I would say to see if there are other ways before you go there! Speak to the debt charities if you think you will need the help.
I would also add your SOA on here, its really helpfull for others to point out where you are spending to much and cant cut down...(somepeople know a link for it and might be along in a bit)
Could your dh get any extra work?? Also there are ways for you to improve your income if your working part time. Like selling on ebay, doing surveys, mystery shops etc there is a board on here somewhere with a list of things you can do.
good luck.

dancingfairy

I would go with RAS' advice - you really need to do an SOA as you need to work out what the cause of overspending is/was - otherwise you could sell the house (potentially) pay off the debt but if you haven't learnt to budget and make cutbacks then you are likely to rack the debt back up again and this time you will have nothing to bail you out.
Please think carefully as a lot of people take out a consolidation loan or pay their debt off - haven't really got the right idea and carry on spending and the cycle repeats until they can't get any more loans etc and end up in a worse mess.
Also if you did move in with your parents in law there would be a lot of other things to think about - will you resent them? will they resent you being in their home? do they want a small child living with them? will there be enough room for you all? how will it affect your ability to get work or your OH's etc? how long would you stay? would you want to then rent or buy a house?
P.S This has not come out quite the way I meant it - it sounds a bit fierce but basically I mean think outside the box and consider all your options.
Best of Luck with it all
df

Perhaps you OH would be grateful to share the task of monitoring the bills - you might enjoy it or have more time to check out deals and shop around. Jointly or singly you need to find a way that works for you - and if the worst did happen and he wasn't around anymore you would need to have an idea of the financial situation as if you had no idea it could make things even more difficult for you at what would already be a traumatic time. This would also apply the other way around if you took over the main responsibilty for the bills.