Very Big decision, am i doing the right thing?

Tuscan

Hi all

trying to get me head around then best thing to do.

quick run down

Married with 2 kids 2yrs and 19yrs, have owned our home for 9yrs with a perfect mortgage payment record at £600 a month 16yrs to go. we have a secured loan on the house £325 a month 4yrs to go also perfect record.

Got into debt about 6yrs ago and went on a dmp currently have about 27k outstanding and paying off at £440 a month with around 6-7 yrs left until paid off, also have a CCJ for 27k and paying off at £250 a month, will take for ever to pay off as getting hit with over £200 a month in interest by Natwest, wife has debts at £100 a month..

so we have
Mortgage £600 house value 195k+ oustanding mortgage 85k
loan £325 outstanding 14k
CCCS £240 outstanding 27k
CCJ £250 outstanding 25k
wife debt £100 outstanding 10k

Total £1515 a month or 161k outstsanding

i am self employed so income up and down but always have managed to cover everything including all the other normal living cost, wife's part time so has a bit of spare cash to play with to treat kids etc.

my debt concerns are that the CCJ will never get paid off plus there is a clause in it that they can take me back to court and try to get more money and/or a charge on the house, also nothing to stop other creditors also getting nasty and following same route although all seem stable for now and have been ok over recent years.

the idea we have is we have wanted to move out of our area for quite some time and in to a more rural/better place to bring up our daughter, we are thinking of selling up and clearing all or most of the debts, then renting for a few years before buying again when the credit file is better, its also a fair bit cheaper were we are looking, we will then be in a position to offer full and finals on the debts and maybe only have to pay 60 percent off the CCCS and CCJ debts?, this would leave us with around 60k over to put in the bank towards a deposit for another house in the future. We can rent a nice house/cottage etc for around £600 a month so will be around £900 a month better off! plus living in a much nicer place..

trying to see a reason why this isnt a great idea and our only way out without years more of the same, worried about stepping off the property ladder though..

ive based this on the minimum i expect to get for the house, we could get 10k more, also we could pay more or less of the debts depending on what we can get them down to on ff figures. we could also just pay off the bigger stuff and reduce the the rest of the CCCS payments down to leave us with a bit more cash in the bank, ideally i would want to have 50k minimum in the deposit/backup fund, as we will prob need to pay 6 months rent in advance plus deposit due to credit check fail so thats another 4k+ we will use, but it will be replaced monthly as if i was paying the rent..

so what do you think?

weehev

Hi there.

i am by no means an expert on these things and i have never rented before.

however i would say go for it, clear your debts and you can start to save the extra money each month for a deposit to get back on the housing market. yes it will take a few years however will be worth it to clear the pressure of the debts.

good luck

xx

Trollfever

worried about stepping off the property ladder though..

You will be escaping from the mortgage debt pit that is designed to make the fat cats even fatter.

rubber_soul

You're right, it is a big decision!

I'm no way an expert either and I'm sure you'll get some detailed advice soon, but from a personal point of view I would be tempted to sell and pay off your debts. I imagine it would it be a HUGE weight of your shoulders to be able to offer a final payment and a chance to draw a line under it and start saving again for the future. It would also obviously give you the chance to live in an area you want to

Tixy

Tough one, and probably only one you can answer at the end of the day. One thing I would say is that whilst it would be nice to get 60% settlements have you costed it out if none would accept reduced F&Fs and you have to pay the full amount (partic on the CCJ). If you take a worse case scenario and it still works out you'll be better off then anything extra will be a bonus.

Tuscan

Hi, worse case if we paid all debts off at full price and got say 193k for the house then we would be in the green by about 29k after selling and legal fee's, but i would be a bit twitchy at only having 29k over even though its a lot of money, so would maybe pay most debts off but leave some of the smaller ones that are interest free and clear them over the first year or two and leaving say 40k in the bank..

On the CCCS debts i would hold out for lower full and finals and would be happy to play a game with them for a few months with making offers etc as im sure there will be some room for movement on them, the CCJ im pretty sure they will settle at under 20k as they told me a few months back that theres a 22k settlement figure already on the account and just before it went to court in 07 they offered me 17k to to settle but never had the money then, so im sure they will come down especially as when the house is sold they cant get a charging order any more...

tallyhoh

Sounds okay to me. As for stepping off the property ladder, well, sometimes I wish I had never stepped on it. Renting isnt such a bad idea.

Tuscan

the good thing with renting is we could live in a dream house that we prob could never afford, theres converted barns and cottages etc on working farms that come up regulary in the area's we like. did also consider renting long term then in a few years buying say a cheaper/investment property like a small flat and renting it out ourself's so still keeping on the ladder without needing a much of a mortgage...

whitewing

It can be so hard to know if what you're doing is right. When we moved down South, we - we at the time being me and DS - moved in with family, got his school sorted and got a temp job as well as started up a business. I sold the house later when I could be established enough to make the decision. So I was a period without being on the property ladder. Managed to get sorted - it was hard work though - but the relief of having made the decision at last was enormous.

Sic years on, am married with baby daughter, and now just run the business. Could never had dreamt I would have been in the situation to do all this. And have learnt my lesson so am endeavouring to overpay our new mortgage. At least you had your lightbulb moment before you sell your house - mine came after I'd been living off the profit for rather a while.

Getting to a point of staying in credit always - even with little - has given a huge psychological boost. And it's amazing what feeling in control can do motivationally, even if it's not always the absolutely most financially-sensible idea (eg I never rented out my house when I could have done, just couldn't deal with any more decisions).

Batfink

I think it's a very good idea - people can get caught up on the whole 'owning your own home' front, but when, in fact, the amount of your home that you actually own barely covers your debts you don't own anything.

By doing this you'll make an immediate improvement to your own life and the lives of your family - get that for-sale board up!

x

Marisco

Must agree there, I'd sell up, pay the debts, rent the place you want, and enjoy myself - debt free!:)