DMP, some queries..

bananah

Hi,
We currently have a DMP through the CCCS.

We have paid off a good amount, and things look good for the future (I think!). I have been lucky enough to be successful with my company, and we've been able to put small amounts aside, and then offer F&Fs, which are starting to be accepted. Hopefully more to follow.

My dilemma is this; my wife is pregnant again, and our house is already too small. This means that in the next year, we should really be thinking about a new house. Our options are rent or try to buy bigger without spending too much (compromise on location, schools etc). Our first child has JUST started her new school, so I'm reticent to move too far.

I think there is about £50k (max) equity in our house, and we have about £45k left on our DMP. Currently paying off about £800 pcm on DMP, but knocking off some smaller debts as and when we can. Current stat suggest we will be paid off by 2015, although likely to be much quicker.

OK, so, do we look at:
1. selling our house, using some of the equity to pay off the DMP, then rent. If so, will we be ABLE to rent given our credit rating will be shot to pieces for the next 10 years. Then try to save for a new place.

2. trying to stay where we are and get the DMP paid off ASAP, then with the equity in the house plus more monies, find a deposit for a new place. Similarly, I imagine trying to get a mortgage with our rating will be nigh on IMPOSSIBLE! And if we did, we would probably need about £100k for a deposit (4 bed house here is about 400k).

Any advice really appreciated.

Thanks

Hax

I wouldn't class this as advice, just my feelings on the matter:

Personally, I'd be reluctant to give up the equity you have in the house. In five years time, prices will be even higher and you'll need a larger deposit - plus, your equity will have increased.

Rent wouldn't be much cheaper (may even be more!) than your mortgage payments - and is just lost money - your mortgage payments are at least increasing the equity you have in your house - especially if house prices start to rise again. And your £800/month that you wouldn't have to pay on the DMP wouldn't replace the £50K equity you have in the same 5 year time frame.

Plus, if you're on a DMP, then I assume the debts have been negotiated to have the interest frozen on them - effectively making them interest free.

As I said, not really advice, just how my mind views it - hope it helps a little

bananah

Yes I see what you mean, and I'm almost certain its going to be nigh on impossible to get a new mortgage with our rating. BUt what that means is we're effectively stuck in this house for some time to come. I'm hopeful there might be another solution - I just don't know what!

thanks