Should I sell my house?

Bigbubble

Hi

This is the first time I have posted as a DFW. I feel ashamed about the situation I am in and wouldn’t talk to anyone about it. Obviously my husband knows but I think he just expects me to sort it out – the small hours can be a fairly bleak and lonely place and I am always trawling through this site looking for both ways to save money and also to get out of the situation.

We owe about £55000 in all (various cards, loans, etc) and also have a mortgage of £187000. We can’t remortgage (I assume) as my husband has just lost his job and is intending to start up a business on his own. Our house is worth almost £300000 so I think that the only option is to sell the house and ‘downshift’. Our house is not big but we live in a very expensive area so I think we would have to move quite a way from London to be any better off. In any case I image we wouldn’t be able to get as big a mortgage on my salary alone (£35K).

I would be very interested to hear about the experience of other people who had to sell their home. Did you buy a cheaper property or rent? Was it a relief or the biggest nightmare? Does anyone have any other suggestions?

Thanks for listening - and what an excellent site.

vyvyan_2

I'm sure you've worked this out yourself but to clear your mortgage and other debts, you would have £58,000 left over (on that figure, take off estate agent fees & solicitors etc). That leaves a pot in which to pay out rent, not forgetting desposit & admin fees. Rent as cheaply as humanly possible (1 bed flat if you've no kids). How long would that last? At some point you might want to get back on the property ladder needing deposit, fees, self employed mortgage and all the rest to consider. Are you earning?

Sorry, I know I've not really answered your query here, just my thoughts on your situation. Hopefully someone with experience of this can reply soon.

lynzpower

HI there Bigbubble

There are a couple of us selling up on here, for me its a positive decision and I wont be using the proceeds for debt clearance, but for some they have literally no choice.

It can be a good idea of course, Toto is doing the same from a "moneysaving" point of view, ie shes saving 100s per month by moving to rented, we will save about 500pcm by renting. So we are doing it for moneysaving not clearing the debt.

Im taking from your post that your hubbys lost his job, hes now setting up his own business, and that your salary will have to cover the repayments on the debt as hes not curently earning.

A few things, maybe youve seen an SOA while youve been mooching about
If you stick your SOA up of incomings & outgoings, then we may be able to show you some cutbacks.

Also with the best will in the world, businesses can take a hell of a lot of time to bring money in, often take people into further debt at least in the start up phase and can lead to plenty of stress and heartache at least at the start. There are quite a few DFWs who have got here through setting up thier own businesses. The advice is usually 2-fold, one work along side it even if its a part time job, its important to have some money coming in to be contributing to debt clearance & business overheads. Also have you checked out any start up grants and so forth from places like business link? there may be money coming forth from there. But with the best will in the world, most small businesess struggle, as bills need to be paid before the money comes in. I suspect now is just not the right time to be setting up a business, unless the plan is solid and contracts are secured in advance

With the greatest of respects hun this bit bothers me

my husband knows but I think he just expects me to sort it out

YOu know that you should be sorting this one out together. He probably feels a bit responsbile due to him losing his job, but at the end of the day thats not helpful. He needs to be proactive too ( easier said than done, I guess)

ON a practical note, there are a few options
1) cutbacks & increasing income
2) Debt management plan- or DMP this is if your income wont meet your debt payments, and a charity like CCCS or Payplan ( along with fee-charging companies- avoid them) will negotiate with your creditors to freeze interest and reduce your payments. Heres some info http://www.cccs.co.uk/faqs/debt.htm
3) selling the house and renting/buying again. Im in london too, and we will sell our place, make a bit of equity and stash this in the bank earning interest for a while until the property market settles down. there are interest rates on the horizon and Im worrying about these! ie I wont be able to pay them. I am not convinced property will rise, rise, rise, still, and I want to get some cash out of this place while I still can. The intention being that eventually, whne we are ready, we will buy a smaller, cheaper, stamp duty exempt place in outer london, zone 3-5) with a larger cash deposit and a smaller mortgage that we can overpay. Saying that we might move outside of london, who knows. BUt we are going to put the place on the market using https://www.houseladder.co.uk ( saving thousands in EA fees) as the cost is £500 but there is cashback on quidco and houseladder feeds into rightmove which is important to me

Any way Im rambling, but a big welcome to debt-free wannabee, :wave: you are in good company here, any questions just give us a yell, someone will always know the answer and if you want a moan, thats what we are all here for

tyllwyd

I agree with what Lynzpower has just said - you need to look at the whole picture, including your OH's job/business. If you sold up and moved to another area, would you be able to commute back to your job? How much would that cost you?

With your OH's new business, how much money will he need to set it up? How long do you expect it to take before he can take any money out of the business? Does he need business premises, or can he work from home? Is that affected if you move house?

What happens if you don't move house? Is there any way you can keep up with the mortgage & other debts on your salary alone? Would moving and renting in the same area be an option?

I think you and your OH have to have a sit down and an honest discusssion about your options. My feeling is that if he wants to start up a business, it is vital to make sure that your finances are in order before he begins, or else your personal debts will drag you both and your business under. At the very least, he needs to find any sort of work to bring some money in to try to help keep things afloat until he is ready to get his business going.

Good luck with everything!

sanfrancisco

Only sell your house IF BOTH OF YOU have had your lightbulb moment. If you have not, you will spend any money that you have on stuff/business etc.

This is not the time for hubby to start business. He needs to get a job, pay back the debt and THEN start a business. I appreciate that his self esteem will be low at the moment, but it will be even lower if he has a failed business/no house/no savings.

Toto

As Lynz has said I am selling my house and will be using the equity to clear my debts. For me this has been the obvious solution to my problems. But, my main motivation for selling was my Interest only mortgage which was costing me £1106 per month. I have moved into a lovely rented house and it is saving me a total of £800 per month. We run our own business and the house move has meant we could give up one of our storage units, plus our council tax and water rates are included in our rent.

This has been the best thing I could have done, the house we rent is bigger, in a lovely area with fantastic neighbours, even my cats are happier! But it is a very personal decision and not for everyone.

I am very aware of the fact I have stepped off the housing ladder, but funnily enough I don't really feel bad about that, I actually feel more in control. I can stay here as long or as short term as I like, I can move with a month's notice (not that I plan to). I have no worries of house repairs. Also, I can pick and choose if and when I decide to buy again. We actually plan to buy in Canada in the future rather than buy again here (my OH is Canadian). In the meantime I am saving as much money as I can (which is possible only because I am now moving towards being totally debt free). It is actually possible for me to save £1000 per month and still have the same lifestyle I had before we moved, ok, it's a DFW lifestyle buy I am more than happy with that, I love living as cheaply as possible, especially when I can see the results in my savings rather than in the creditors pockets.

I am not trying to swing your decision, as I have said this is very personal and there are some down sides. But, it isn't as scary as I thought it would be, but then I never really had any attachment to my old house and I know I won't suck much more equity out of it.

As for starting a business, again that’s something only you can decide. I will say that my debts almost exclusively came from starting my business. Ours is a very expensive one to start in fairness, but my debt came not from buying equipment but all of the extras. We had to buy public liability insurance, plus employers insurance, dry hire and general insurance for the gear (£6500 in total) on top of that we didn’t really factor in all the months where we just couldn’t take any money, so the mortgage, living expenses, workshop rent, vans all had to come from personal funds. All of our income was spent on buying gear we needed (the hire costs meant we were out pricing ourselves from getting work). So, my debt which was around £7,000 became £60,000 in the space of 16 months. Obviously some business’ can be started much cheaper, but unless you already have a client base waiting you do need to know you can manage on your salary alone, otherwise the debt will grow and grow. We didn’t have the benefit of an income at all during our rough months; both the OH and I work in the same industry so we had to both give up our jobs to start up. We did start with a client base but it wasn’t enough.

Anyway, I have rattled on enough, I need to go to work now but I am in and out if you have any questions. Good luck with it all and let us know what you decide.

tesuhoha

Your house is your home, your security and if you sold it you might end up living somewhere you found unbearable. I would only sell it as a last resort. What I would do would be to take all the advice on this site about reducing every outgoing you have and then throw every spare penny at the debt. I would pay off the highest interest rate debts first and if I was able to I would apply for 0% cards or life of balance cards, all detailed on this site, for the purpose of paying off debt. (Not under any circumstance would I use these cards for purchases). Please remember that once youve sold your house you won't be able to go back, and you might end up in a very uncomfortable situation, worse than the one you are in now. You have to live somewhere for the rest of your life and property is very expensive. My brother sold his house to pay off his debts and I dont think he regrets it but they live in a rented farmhouse in the country and had quite a lot of money left over to spend on themselves after paying off all their debts. However they are quite lonely and have moved away from all their friends. Also their son has gone bankrupt so theyve got the problem of him too. I'm sorry if this is not very helpful but I'm just saying what I would do in your situation. I would be determined not to lose the house.

sanfrancisco

tesuhoha wrote:

Your house is your home, your security and if you sold it you might end up living somewhere you found unbearable.

It stops being "your security" when the money you pay out on your mortage is excessively higher than the equivalent rent would be. You might end up living somewhere you prefer, somewhere safer, somewhere you couldn't afford to buy in, but can afford to rent in.

ZTD

Bigbubble wrote:

This is the first time I have posted as a DFW. I feel ashamed about the situation I am in and wouldn’t talk to anyone about it. Obviously my husband knows but I think he just expects me to sort it out

Have you asked him? It is not for you (singular) to sort it out, but for you (plural) to sort it out.

Bigbubble wrote:

– the small hours can be a fairly bleak and lonely place and I am always trawling through this site looking for both ways to save money and also to get out of the situation.

The small hours should be spent on sleep. Remember what happened to Lady Macbeth when she couldn't sleep.

Bigbubble wrote:

We owe about £55000 in all (various cards, loans, etc) and also have a mortgage of £187000. We can’t remortgage (I assume) as my husband has just lost his job and is intending to start up a business on his own.

DANGER!

Is this "My husband has been planning his own business for years now, has a business plan and funding, and was only waiting for the opportunity to strike."

Or

"My husband is now unemployed and suddenly said "I'm going to start a business" in sort-of the male equivalent of buying a pair of new shoes when you're down"?

The top three necessities in property are "Location,location and location". The top the necessities in self-employment are "Cash flow, cash flow and cash flow". More businesses fail through insufficient cash flow than because they were unprofitable. There are only three ways of generating cash flow.

• Profits from the business - this doesn't happen during the early days.
• Running down savings
• Running up debt

You don't have savings as it's not listed as an option, and you are close to the end of your tether on debt as you're starting to worry about it.

Where is the cash flow for this business going to come from then? Or does he expect you to sort that out too? In fact, since he can't cope with running the household "flow-of-funds" despite having more time than you, is he ready to run a business?

Bigbubble wrote:

Our house is worth almost £300000 so I think that the only option is to sell the house and ‘downshift’.

Post an SOA. Put all of the cards on the table - then options should flow from that. Selling your house and paying off your debt has all the "quick-fix" lure of a consolidation loan. But you'll get back to this despair again unless you both change your ways.

Bigbubble wrote:

Our house is not big but we live in a very expensive area so I think we would have to move quite a way from London to be any better off.

That depends on what rents are like. This is something you (he, as he has more time) will have to look into. House prices have disconnected from wages and rents - you can't now use them to predict rents.

ZTD

tesuhoha wrote:

Your house is your home, your security and if you sold it you might end up living somewhere you found unbearable.

Not in the slightest. This is an emotional way of looking at a house. A house is somewhere to keep the rain off your head and the cold out of your bones (and a cupboard to keep junk ). Owning it, or renting it does not change that.

If you find yourself in an undesirable location that you own - in many cases you are stuck.

If you find yourself in an undesirable location that you rent - it's one month's notice.

Just to change the well known saying a little. A house is the biggest liability that you will ever own.

tesuhoha

ZTD wrote:

Not in the slightest. This is an emotional way of looking at a house. A house is somewhere to keep the rain off your head and the cold out of your bones (and a cupboard to keep junk ). Owning it, or renting it does not change that.

If you find yourself in an undesirable location that you own - in many cases you are stuck.

If you find yourself in an undesirable location that you rent - it's one month's notice.

Just to change the well known saying a little. A house is the biggest liability that you will ever own.

I agree with this reasoning but I would still say think very carefully because once you have made this step you cannot go back. If youve lived in a place a long time it does become home and you do become emotionally attached to it. A house is not always a liability or perhaps if it is one to you then you should not own one. The way I see renting is that you pay thousands and thousands of pounds to pay someone else's mortgage and at the end of it you have nothing to show for it. No worries and freedom perhaps but nothing to show for the money you have paid out.