Advice on going from a mortgage to renting

earthboundboy

Hi

We have a number of debts that we are paying off painfully slowly via the CCCS. Our situation doesn't look likely to improve for some time, and whilst the house is one thing we endeavoured to hold onto it is possible that if we sell up and move to rented accommodation we could settle everything with the equity we have (providing our creditors will accept a reduced amount as full and final settlement).

Can anyone on here offer any general advice on their experiences of doing this? Are you in a similar position and considering it? Or have done it and cleared everything?

Many thanks!

S

briona

earthboundboy wrote:

Hi

We have a number of debts that we are paying off painfully slowly via the CCCS. Our situation doesn't look likely to improve for some time, and whilst the house is one thing we endeavoured to hold onto it is possible that if we sell up and move to rented accommodation we could settle everything with the equity we have (providing our creditors will accept a reduced amount as full and final settlement).

Can anyone on here offer any general advice on their experiences of doing this? Are you in a similar position and considering it? Or have done it and cleared everything?

Many thanks!

S

Hi

I've never actually been in this situation [I'm still renting] but I think the only way to be SURE that moving from owning to renting would work, is by seriously looking at your spending.

My main concern is that it's probably NOT your mortgage [and associated costs] that are the root of the problem, but your spending. Selling up would give you some available cash [depending on whether you got the asking price, how much is outstanding, how much debt you've got etc] but it would not address the real problem. In effect, it may serve the same purpose as consolidation [always a no-no] – a short term fix but not a long-term solution...

That's my penny's worth...

Briona

earwig

DONT DO IT if you do you will be paying a lot more in rent than what you do now you wont get help of housing as you will be housed allready and you will be stuck there you need permission to do everything and most landlords just want there house to stay they way they let it to you if you do this you are just buying someone else a house then in the future could you aford to start again deposts geting morage as house prices are so high and there wont be that crash what everyone hopes for stick to your 1st idea and cling on to your home for as long as you can we done what you want to do and is nasty living with someones else choice of colour not being able to put what plants you want in the garding having agents checking your looking after the place and worst not living in a home just stuck in someone elses

earthboundboy

It's not the mortgage as such that is a problem - we have been on a CCCS DMP for nearly a year and our spending is as tight as it can be. We wouldn't actually be that much better off each month renting, but we wouldn't have £50k of debt being paid off at £127 a month via the CCCS and a CCJ.

We've been through the whole process of budgeting, sticking to said budgets, not borrowing any more etc and have done pretty well with all that. It's really an option we are considering in order to be able to start again with a clean (ish) slate. Also, we'd be protecting ourselves from the prospect of one of our creditors taking further action against us somewhere down the line and the choice of selling our house being taken out of our hands. As I'm an accountant bankruptcy would have serious consequences for me career wise.

earthboundboy

earwig wrote:

DONT DO IT if you do you will be paying a lot more in rent than what you do now you wont get help of housing as you will be housed allready and you will be stuck there you need permission to do everything and most landlords just want there house to stay they way they let it to you if you do this you are just buying someone else a house then in the future could you aford to start again deposts geting morage as house prices are so high and there wont be that crash what everyone hopes for stick to your 1st idea and cling on to your home for as long as you can we done what you want to do and is nasty living with someones else choice of colour not being able to put what plants you want in the garding having agents checking your looking after the place and worst not living in a home just stuck in someone elses

Because we have a charging order on the property and an associated CCJ we are unable to get a mortgage at a decent interest rate - Egg (who applied the charging order) are insisting that if we remortgage we have to clear the amount they have against the property which means our monthly mortgage payment would still be around the £950 mark, even if we could find a lender who would do it on our salaries (they won't). Rental around here for a similar property is about £850 a month. We currently pay £950 mortgage, £82 to Egg on a CCJ and £45 to the CCCS for the rest.

We can't actually do much to the house we are living in now anyway as we don't have any spare cash. And what if the boiler packs up, for example?

southernscouser

Firstly you would have to see what full and final settlement figures your lenders would accept! I would be tempted not to do it if you still had debt outstanding!

Have you asked The CCCS for their advice?

Secondly alot of places now do credit checks to see if you are suitable to rent! Chances are you will fail this!

IN_LIKE_EVERYONE_ELSE!

Just a couple of questions,

What did you pay for the house?

What is the outstanding mortgage and secured loan?

Do you have any other debt?

Good luck, stay calm.

earthboundboy

The CCCS have suggested I call the creditors to get an idea of what they would accept.

The mortgage outstanding is 150k.
The egg loan (secured) is 16k (reducing at £82 per month via CCJ).
The other debts amount to about 35k and we're paying them via the CCCS at £45 a month.

The value of the property I would estimate to be somewhere in the region of 195k (we paid about 175k for it 18 or so months ago)

On the credit scoring front - I was under the impression that most letting agents will simply insist on an extra month's rent in the deposit to cover themselves, which is fair enough.

We intend to get the property valued properly, deduct the mortgage and secured loan from that, then a nominal amount for moving costs (solicitors, transport, any small bits of additional furniture etc) then see what would be left to offer the creditors.

It's a risk as the margin is quite slim and about 80% of the unsecured debt is with Yorkshire Bank, so much hinges on what they would accept. If we cannot clear everything then there is no point imho. I'm also not sure about the timing of everything - for example we don't have a deposit until the money from the house sale goes through, but we'd need to tie the moving dates up (ideally have the keys to the rented house before we are due to move out of our current place) otherwise we'd be forking out for furniture to go into storage and descending on the family until we've got somewhere sorted.

If it all came off though, we'd be a good £200 a month better off and debt-free!

I'm pretty confident we'd never get ourselves back into debt as the last year has been hell on earth.

THE_LONE_RANGER_4

the idea of selling and renting ive done it best thing ever, i rent on a large country estate 3 bedroom house secluded £288 pm 100ft garden drive way etc long term tennancie ie as long as i want it paid off all most all my debts best thing ever i also looked at national trust property an dgot offerd one i dont no what its like cities etc but here in shropshire you can rent a bargain if i bought something like this it would be at £450k way out of my league no hassle of landlord repairs done with in a week ie non urgent same day for urgent do your home work there is some nice places out there you only live once live where you want

whitewitch_2

I did it, however I had over £50K equity on the house so that made a huge difference to debts. You said you had about £20k but bear in mind solicitors fees etc. Would it be worth it? I have been renting for over 2 years now and with house prices going up and up am finding it very difficult to get on the property ladder again.

As to landlords- the ones I have had wanted references but i don't imagine they can do a credit check.

do your sums carefully and don't do anything hasty.

Good Luck whatever you decide.

earthboundboy

Thanks all.

I am now looking at these companies that buy your house and then lease it back to you - anyone have any experience of this at all?

It removes all of the upheaval, gives us some cash to clear most of the debts and we'd be paying less in rent than we are on the mortgage.