Should i sell and rent?

lookingforthelight

Hi,

I love hearing from you guys. Its feels so much better when you don't feel alone.

The 85k debt is with a mix of internal and external collection agencies.

I am allowing 70k to full & final this and expect to have approx 25K to put into my deposit savings. This is after deducting house selling fees. N.B this is based on a sensible expected valuation after I have tarted up the dated bathroom and kitchen AND also not quite getting full asking price.

With our stripped back budget we could stay debt free going forward and trickle money into savings.

I know my credit file will be peppered with defaults but after DMPing in 2011 and renting thru 2012 the defaults will already be 2 years old and in 2013 I would step up improving my credit score. I understand things start easing up after the 3 year mark - obviously not to get stupid loans but to get an affordable mortgage.

I like the sound of renting out my property and will look into this. I'm not sure what I may need to spend out to make it rental ready.

I'll keep you posted and please keep your advice/experiences coming.....

thx

no_pennies

i love that all of you are so helpful too
we have decided that selling is the best option for us (depending on price we can get for house ) i have tried to get help from the halifax omg 4 phone calls and no answers later for example you can only phone financial difficulties team if youv'e no arreas ,and you can only get help after youve missed a payment how does that work !! anyway got to come up with a plan to try and save for rental deposit and get a estate agent to value our house , does anyone know where to find private landlords or have any experience of local council/housing !!! buying your house and you renting it back i would love to do this but have heard of terrible stories of people being fleeced

dancingfairy

A few points I think are important to make:
1) you need to work out why you are in debt - not so you can tell the world but you need to ensure that the same circumstances don't arise again - obviously if you sell your house and haven't got to the route of the problem you will end up spending any spare money left over from the house sale and still be in a pickle.
2) in reply to no pennies - selling to housing associations and renting back can be done through the mortgage rescue scheme if you qualify for it - I wouldn't personally touch any private companies with a bargepole and would only consider the mortgage rescue scheme - there is a great, but long thread on it on the bankruptcy board.
df

dancingfairy

looking for the light - can you remortgage at all to release the equity? obviously you would still have the debts but hopefully at a lower interest rate but spread over a longer period of time. Obviously this is not without it's own risks - ie you fail to make the new payments and your house is in jepordy but might be better than the costs incurred of selling up and renting? obviously the intention then would be to overpay the mortgage as much as possible but it is worth considering - especially as you mention having to do work on the property to sell it, getting less than you ideally want, solicitors costs, rental costs, moving costs etc?
df

climbgirl

I'm with boo80, I'm not convinced this is the right course of action!

You don't seem to be struggling to cover the mortgage and seem comfortable paying off the debt. It will take you years to resave for a deposit (which will be much larger than what you needed first time around given the current state of the mortgage market). And selling is still going to leave you with a pretty sizeable debt to pay off before you can start saving for the deposit again.

You're also selling the house in a market where property prices are falling and rent rates are rising...

climbgirl

lookingforthelight wrote: »

I understand things start easing up after the 3 year mark - obviously not to get stupid loans but to get an affordable mortgage.

I'm not sure that's correct actually - banks are not lending at the moment, it's incredibly difficult to get a mortgage. That will ease in the years to come but gone are the days where they lend to anybody. They scrutinise everything now, even day-to-day spending as well as credit history. I really don't believe that they will let some defaults slide after a couple of years.

Why don't you speak to a mortgage advisor / broker about what they're looking for? You don't need to commit to anything or even give your name, but it would be interesting to find out what banks look at in the current market. It has changed a lot since the credit crunch and it'll be a long, long time before it returns to the way it was (if ever).

makemedebtfreeplease

At least if you are paying a mortgage it isnt dead money, renting is basically lining someone elses pocket, so really unless its unavoidable I wouldnt go from owning to renting, over the years your equity will hopefully increase and you could always look at remortgage in the future

[Deleted User]

Dead money - that's debatable. Interest is paid on a mortgage and depending on the interest rate, what you would have paid in interest to the bank when renting can be paid into a high interest savings account.

flyingember

I would be very careful about renting out your home. You clearly don't have money to spare so what would you do if you could not find a tenant, the tenant did not pay the rent or smashed the place up and disappeared? Unfortunately, these things to happen.

Good luck with what ever you decide

fe

Verbatim

[Deleted User] wrote:

Dead money - that's debatable. Interest is paid on a mortgage and depending on the interest rate, what you would have paid in interest to the bank when renting can be paid into a high interest savings account.

What high interest rate accounts? Are there any at the moment?

Yes you pay interest but at the end of the term you own outright a valuable asset that doubles as your home.

To get a good rate of interest for a new mortgage you need around 25% deposit. If you have 10% you can still get a mortgage, depending on any other debt and your credit rating, but at much higher rates of interest. You may also have an arrangement fee, valuation fee and anything else the bank can think of fee....

I'd say stay put. As you have your own house have you considered taking a lodger, even Mon to Thurs night, or perhaps a foreign student if there's a language school nearby. It doesn't have to be forever but would 6 months of such extra income pay off a particular debt or help to get out from under the load?

You could try putting up an SOA for help with reducing outgoings or increasing income. It's amazing how a meal plan and shopping list based on what's already in the cupboards and fridge plus going down a brand can reduce outgoings.

Good Luck whatever you decide.