Advice needed on complicated situation pls

lou777

Hi,

I desperately need to make a decision on what to do. I have been out of work for 2 years following serious illness. My partner and I own a house worth £250k with a 51k mortgage. We cannot afford to carry on living in the house due to the 29k debts I have built up through ill-health. The only way I can see out of this mess is to sell up and downsize. We have discussed getting a lodger or renting the house out. Does anyone have any other ideas? If we rented the house out and rented somewhere for ourselves to live, I don't think we would be much better off (we could rent out house for approx 900-1100 and rent ourselves for 600 but that doesn't help enough for the upheaval).
I doubt we could do a let to buy due to my debts and lack of income.
I don't want to let my partner down as he can afford to stay in the house - it's just me that can't.

Thanks

Lou

[Deleted User]

It's hard to give advice without knowing your personal circumstances i.e. will you be able to go back to work in the near future? If so, I'd get a lodger. If not, I'd sell up, pay off mortgage and debts and buy a smaller mortgage free property. I wouldn't rent out the house as you never know what they're going to do with it and you could be left with damages/bills worth £££. Best of luck!

Jorgan_2

As Van says its difficult to comment without knowing your full situation. As I understand it, you owe £80k in mortgage & debts. You have a property worth £250k, so £180k in equity. Can you buy a property in the area you want to live for about £140-150k or less? If so you could put a decent amount in the bank.

I personally wouldn't come of the property ladder, if you bought a property mortgage free its yours, you wouldn't have to worry about a landlord giving you notice to move.

lynzpower

maybe take this idea to mortgage free wannabee board

Im personally in process of thinking about downshifting to a similar sized property in a cheaper area in order ot have lower outgoings. I dont have much equity in mine though., Id be off like a shot!

lou777

Thanks for your comments. We could buy something decent for 165k upwards so I suppose the best thing would be to sell up and go for mortgage-free. I guess I am only hanging on because we used to have the place we are in now mortgage-free until I got ill. I doubt I can earn enough to pay everything off without incurring masses in interest charges as I am still unable to work full-time and although I set up my own business last year, these things take time to take off and I have no idea how it will pan out. I don't have much time. I need to earn about £900/mo to pay minimum cc charges, let alone pay them off quickly. I don't want to give up without a fight, but am worried that in a year or so, I may wish I had made the decision to downsize earlier if my business doesn't take off as quickly as I would like.
Also, as our house is around the 250k mark now, it may be better to sell up before it goes over that due to increased stamp duty for would-be buyers and also the seller's pack due out next year. It was our dream house but getting ill is just one of those things that I couldn't forsee and I can't help.
We don't even have the money to move, but could borrow a few grand that could be paid off when the house sold. I guess we just need to bite the bullet and get on with it :-)

lou777

Thanks lynzpower - I wasn't sure which board to post on as mine covers every angle!

mummytofour

Not wishing to be nosey, BUT i guess the ansewer depends on your age?

Becasue for me a total debt of 81k at the age of 28 would be fab, not really a lot to owe with 30 yrs to go..

But somebody like my dad who is 61 would have to sell up, he is struggeling with 40k total debt ( morgage)

I can see how many would say, sell up and live the debt free life, this is a good idea in many ways, but I think you do need to look at the long term, work out what you want from life and also decide how much worry is being casued by your current situation, if its giving you sleepless nights, then for sure I would say go..

Im sorry, not really much help today!

sashacat

it also depends on your business, and whether you will run it from home....do you need the space, can you run it while ill.....you will have to register it with the local authority and they may not agree...think carefully before you sell up

lou777

Hi,

I am 31 so the size of the debt is no big deal over a lifetime. The main snag is the interest rates on my credit cards which mean that the debt is growing until I can start to chip away at it significantly. As I don't have an income as such, I cannot put any more on the mortgage than we have. I cannot get another credit card as I have no income and mine are full so I am paying interest on all of them. I have just paid off 2k of a credit card 3k on it by selling my car, but I still have to find 1k to get that clear, and that is the smallest one. The next cc means finding another 1k again, and with the amount I am earning, it could take all year to get that! I don't know whether I am fighting a losing battle or not, against the punitive interest charges. Even if my business goes well, I can't see it earning me more than a few hundred a month, and my part-time work is only temporary for the next few months. I am not well enough yet to commit to a perm part-time job but am doing this one because they know my limitations and are OK with it.
I do run my business from home, so need to find a house with room to do that. I could do that for 150k upwards without too much stress. What do you mean about registering with the local authority? Do you mean if I rent?

ManAtHome

One bit of the your original post intrigued me - that your OH can afford to live where you are, but you can't...

Come, you are a couple - sit down and decide what you'd both like to do. If you want to stay, check out interest rates on your credir cards against an increase in the mortgage. Total repayment will be larger only if you let it run for the next 20 years or so - hopefully, reducing interest rates will will give you a bit of a breather until you see how the business goes. Bottom line is that you'll have the same debt, but may be able to reduce the monthly payments. Even if you decide you finally have to downsize you'll be in a similar position to now.

Obviously treat this like any other consolidation-type loan - something to paid off asap, not something to give you a second run at the credit cards!

Good luck.

mummytofour

Hmmm then I would sell the house as a last last last resort, maybe you could look at some kind of payment plan, debt free wanna be will be the place to visit where you can post a statement of affairs (SOA). I do agree with what manat home says, BUT we dont know all the facts, so I dont think its right to judge.

Please can you make sure you are getting all the govement help you can, IE IB and so on, the benefit bored will help you on this one I am sure.

Vxx