Should I sell my house?

calmdown_3

This is my first post, and I hope this is the right place for it - rather than the mortgage forum.
I am 49 and because I first bought my house 21 years ago, there is about £200,000 worth of capital in it (it is now worth about £400,000). However, I am also £53,000 in debt on unsecured loans. Part of the reason I am in this debt is because I had to buy out my ex-partner when our son turned 18 and, although they gave me a mortgage to the tune of £130,000, I was never really able to afford it particularly as my income suddenly plummeted shortly after. It's a bit better now, but not better enough.
Now I am in the situation where I cannot pay my card bills and I have been in touch with a debt management company to sort out a payments schedule. I had been thinking that I should sell my house and buy one that I can actually afford. However, I will still need a mortgage of some sort.
So, what should I do first? The debt counsellor said there were several options but I feel a bit panicked about what I should do first.

1) Am I right to sell the house? I really didn't want to because I am giving up something I have fought hard to keep over many years, but now I feel it is probably the best idea to buy something with a much smaller mortgage. I am not eligible for an IVA apparently as I have too much capital. I know that I don't have to
sell as they are all unsecured loans but I think I need to make some drastic changes.
2) When should I apply for a new mortgage? If I start a debt management plan, then won't that scupper my chances for another mortgage? Apparently I will need to get a basic bank account, contact all my creditors etc, which I haven't done yet so should I try to get a mortgage now - I have checked on Experian and everything still looks OK so far even though it isn't. But the house isn't even up for sale yet.

Any advice very welcome.
Thanks

abbecer

If you're not tied in to your mortgage, you could look at remortgaging to a better rate and extending the term of your loan. You could also look at taking out some equity to pay off your debts. This way everything is cosolidated into a longer term mortgage. Alternatively if you did the extended mortgage without equity, you would have more surplus cash to repay debts.

You have sacrificed too much to give in now. Look at all avenues.

$17mma

calmdown wrote:

This is my first post, and I hope this is the right place for it - rather than the mortgage forum.
I am 49 and because I first bought my house 21 years ago, there is about £200,000 worth of capital in it (it is now worth about £400,000). However, I am also £53,000 in debt on unsecured loans. Part of the reason I am in this debt is because I had to buy out my ex-partner when our son turned 18 and, although they gave me a mortgage to the tune of £130,000, I was never really able to afford it particularly as my income suddenly plummeted shortly after. It's a bit better now, but not better enough.
Now I am in the situation where I cannot pay my card bills and I have been in touch with a debt management company to sort out a payments schedule. I had been thinking that I should sell my house and buy one that I can actually afford. However, I will still need a mortgage of some sort.
So, what should I do first? The debt counsellor said there were several options but I feel a bit panicked about what I should do first.

1) Am I right to sell the house? I really didn't want to because I am giving up something I have fought hard to keep over many years, but now I feel it is probably the best idea to buy something with a much smaller mortgage. I am not eligible for an IVA apparently as I have too much capital. I know that I don't have to
sell as they are all unsecured loans but I think I need to make some drastic changes.
2) When should I apply for a new mortgage? If I start a debt management plan, then won't that scupper my chances for another mortgage? Apparently I will need to get a basic bank account, contact all my creditors etc, which I haven't done yet so should I try to get a mortgage now - I have checked on Experian and everything still looks OK so far even though it isn't. But the house isn't even up for sale yet.

Any advice very welcome.
Thanks

Why not take the equity out by remortgaging? do you really need to sell?http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1106239308,24268,

CLAPTON

difficult to see the whole picture without more details

could you post a SoA so details of income and spending can be seen

calmdown_3

I did my SOA over the phone, so will need to think about it in order to write down the details. Can do it this evening. However, the counsellor said I have £394 per month available after essential spending.
My main problem with remortgaging, though, is that I do not earn enough money to get a mortgage even on the amount of money I have left on the current mortgage (currently £118,000). I earn around £32,000 (c£1764 - sometimes more when I can earn it). My boyfriend might be able to join in the mortgage - but he is a "struggling artist" and he can only prove around £13,000pa of income at the moment - although he does earn a bit more than that on various freelance jobs. Also have a lodger - £375pcm.

looneyleo

Hi Calmdown,

This is so difficult...it always seems so tempting when there is so much equity in the house. However, if you do go down that path, you shouldn't assume that the house will sell quickly and that it will be the end to all your worries...things do go wrong and there are fees to pay along the way that could put a further strain on your finances before the equity is at last released...I would try all you can in the meantime to make your payments and keep the house...I would only sell it as a very last resort.

Just had a thought...could you rent out the whole house and live somewhere else cheaper/free (parents) while you get your finances in order...that way you don't loose it, but it does pay for itself...all depends on circumstances I know.

Good luck...looneyleo

lynzpower

If you are asking what i would do, Id sell it. Bricks & mortar just arnt worth the sleepless nights. And in saying that, you could sell up and have 200k to buy somewhere outright for cash with and live rent & mortgage free for the rest of your days. To me it would be a dream! But then Ive never been attached to a house, thats why Im in my 35th home & looking to move again!

However, I dont know if this is best for you, until we can have a look at your SOA.