Should i sell and rent?

lookingforthelight

Hi all,

Am I looking a gift horse in the mouth?

I am married with 2 children and have 85K of debt. I have arranged reduced payments with all my credit cards and 1 personal loan.

But even doing this and stripping my budget back to the bare bones
it will take over 10 years to pay off.

I have 70K of equity in my house after an estate agent valuation and deducting their fee and solicitors fee.

I am wondering if a (slightly) less stressful route to happier times may be to sell up, pay off debt with full & finals and rent. Instead of paying into a DMP I would pay into my savings account.

I am thinking that even though saving a deposit will take a few years, at least I wont have creditors on my back.

My biggest worry is once I'm off the property ladder I won't be able to get back on again.

What do you think? Is someone doing this now?

All your advice is helpful.

P.S I cant go bankrupt because of my job.

winner12

Hi
Toyed with this idea myself last year, but will you get what you need price wise for your house with the property market the way it is now how long would it take to sell, rents are very high at the minute, so how long would it take to save up for a deposit If you are paying rent and bills etc, just a few questions you maybe should be asking yourself I decided to stay put thanks to supportive people on here and have gone down the DMP route and hopefully once things improve I would like to offer F&F to my creditors and be debt free too

mrsb83_2

I would definitely consider it if I was in your situation, although it would depend how much you are able to save whilst renting.

10 years is an awfully long time to be living on a very restricted budget.

There is nothing wrong with renting. For stability, perhaps you could agree a long term rental which would be more attractive to you than 6 monthly stints in a succession of rental homes.

no_pennies

thinking about this too looking for the light im sick of worrying about everything and wonder if this would be the answer (might be forced to sell anyway cant meet the morgage this month as wev'e been paying interst only and its back up on feb 1st) i just keep thinking we could be debt free and rent would be less than mgt - still love my little house though !!

lookingforthelight

Hi,

Thanks for your advice.
I think if its a straight case of not being able to afford a mortgage no matter how much you cut back then yes, sell and rent.

If its a choice between a very long term DMP and renting then I think the deciding factor is how much you can save while renting if you want to get back on the ladder. I would rather spend a long time saving a deposit than a long time paying off debt.

Currently, all my equity would only pay off the debt. Thinking about the (long) time it would take me to save a (10%) deposit, I may be able to DIY refit the bathroom and poss kitchen sometime later this year.

Hopefully this would boost my house price so that if I DMP in 2011 and sold house next year (2012), I could full & final my debt AND have most of a deposit as well. I would still need to rent but it would take less time to save the remaining deposit.

Hopefully in 2012 things will start easing up for people.

Sounds like a good plan but i'm still worried about taking the plunge.

Thx

maeeve

We have been toying with this idea for about a year now. We have about £15000 equity with £20000 of debt. We are also on a DMP. Have 2 kids in a 2 bed flat so will be needing more space very soon but will no way get anothe morgage in the next few years so we'll sell up next year and hopefully save a deposit over the next few years once our debt is reduced.

Need to remember also that once you are on a DMP you will have very bad credit and proberly wouldnt get a morgage or any decent credit for about 6 years i think it is.

I understand how u feel about having a morgage it just feels more secure, but i feel life is too short to be in huge debt for the rest of your life and would like to start enjoying life asap

boo80

Noooooo! I can't believe you are considering this! It took us years to get on the property ladder, and now we are, nothing could make us get off! You'll need way more than a 10% deposit the way things are atm, and if you've got any defaults on your account it will be really hard to get another mortgage in the next 6 yrs. Have you started your DMP? I really don't find it too stressful...

tasha-debt

If you were to sell your house how much of the equity would you need to keep to buy a new home i.e the deposit, costs etc (probaly a much smaller home than you have now) and then would the rest be enough to offer full and final payments for all your debts????

I have no idea if this would work, just thinking aloud for you.

[Deleted User]

What's more important - you and your family's wellbeing and peace of mind or a desperation to cling on to the property ladder no matter how much stress it causes you?

lvm

Is £85k the total amount of debt and who are these owed to? Are they to the original creditors or are they Debt Collection Agencies? If the latter, you would be more than likely be able to settle at about half of that cost, leaving you about £25k for a deposit for new house.

Is your current house a desirable rental property and would the rent exceed your mortgage payments? Could you stay interest only, covering the payments with the rent plus earning a bit extra to meet all current debt payments?

Are your current debts accruing interest? If not, would it be an option just to look at your Income and Expenses to see if you can live more comfortably month to month?

charlie84

We are in the process of doing this now, in fact our house went on the market yesterday. We know if we sell at the price its on at (very unlikley) we would have £20K of equity. £16K is charged against the property 1 is an equitable charge the other are restrictions. We also have £50k + of debt and have been in a dmp for 4 years now and still we are in negative each month and thats with our budget stripped back.

We toyed with the idea but for us, we are on a variable rate as we can't remortgage so we knew sooner or later we would have to sell up or lose our home if the base rate jumper to high and we can't afford the mortgage. We are lucky in the fact we can rent near to where my hubby works saving over £350 pm in petrol costs as he can walk or cycle to work (maybe even car share).

You have to do whats right for you and your family, for us this is the best option and our 4 small children.

Good luck with whatever you decide xx