Selling house to pay debts, then renting...

poppy1610

Hi

We have decided to sell our house, and use part of the equity to pay off at least some of our debts, and I would appreciate any feedback on this plan.

We have roughly 50k equity - the house is being valued next week and I'm basing that figure on similar properties to ours. Due to problems over the last year with my husbands business, we have quite a bit of debt on credit cards and loans and, therefore, an abysmal credit rating.

Initially, we thought of downsizing and buying a shared ownership property, but it seems we can't get another mortgage, or take our current one with us. We have no option but to sell and pay off the mortgage.

We are going to rent for at least 12 months, pay off what we can, and try to repair our credit rating that way. Then we will look at small houses - most likely shared ownership.

Stepping off the property ladder seems a scary thing to do - we've never rented before.

Does this seem a sensible plan? Any advice or suggestions would be gratefully accepted

Thanks
Poppy

poppy1610

Thanks for your reply. We don't have any CCJ's or defaults, just too many recent searches and a load of debt. It's my understanding that Letting Agents can only see the defaults and not the debt. Is that true?

Poppy
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iolanthe07

You should be OK if you can pay six months rent in advance.

BitterAndTwisted

Please post on the Debt-Free Wannabe part of the forum, fill out an SOA and ask for guidance on how to proceed. The idea of selling up and going into rented worries me and may not necessarily be your only option. Renting might not be any cheaper than paying your mortgage in the long-run in any case.

poppy1610

We should be able to yes. We'll have the equity from the house once it's sold so it shouldn't be a problem.

I don't want to sell and then be homeless because no-one will rent us a house.

Thing is, if we stay here, and the mortgage rate goes up as predicted, we won't be able to afford it anyway as we're on a tracker mortgage.

On a postive note, at least the stress is making me lose weight. Not much of a positive I know but every cloud...

poppy1610

BitterAndTwisted wrote: »

Please post on the Debt-Free Wannabe part of the forum, fill out an SOA and ask for guidance on how to proceed. The idea of selling up and going into rented worries me and may not necessarily be your only option. Renting might not be any cheaper than paying your mortgage in the long-run in any case.

I will do thanks. Our mortgage is currently £856 a month and will be going up shortly I think. We're looking to rent for about £700 a month so it will be a bit cheaper.

Nikel

poppy1610 wrote: »

Then we will look at small houses - most likely shared ownership

I would look at that VERY carefully. Browse MSE for some of the potential pitfalls of this.

BitterAndTwisted

Poppy, I would advise you to look into shared ownership and/or shared equity very, very carefully indeed. It can all look good at the beginning but unexpected issues pop up sometimes only when you want out. It can cost you thousands and years off your lives to be stuck with a property that you can't get shot of. Just have a read of this forum to find how others have been caught because they haven't understood what they were getting into.

poppy1610

BitterAndTwisted wrote: »

Poppy, I would advise you to look into shared ownership and/or shared equity very, very carefully indeed. It can all look good at the beginning but unexpected issues pop up sometimes only when you want out. It can cost you thousands and years off your lives to be stuck with a property that you can't get shot of. Just have a read of this forum to find how others have been caught because they haven't understood what they were getting into.

Thanks for the advice - we're a ways off worrying about that yet though

By the time we're in a position to look at buying, the market might have changed, and I'll certainly be looking on here to see the best way forward.

At the moment, we're more concerned with getting rid of our big mortgage and not having so many money worries. Releasing our equity will allow us to pay off a large chunk of debt, while still leaving some to save for the time we feel we can buy again.

I can't really see any other way forward at the moment. In an ideal world, of course I wouldn't be selling my house. Sadly, I don't think we have any choice.

Thanks for the advice
poppy
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BitterAndTwisted

I think you REALLY should post over on the DFW board. There are wise and helpful people over there who may be able to advise you

poppy1610

BitterAndTwisted wrote: »

I think you REALLY should post over on the DFW board. There are wise and helpful people over there who may be able to advise you

Hi BitterAndTwisted (are you really by the way?)

Yes, I will post on there. As we are both employed in my husbands business (for now, anyway), it's not easy to say what our income is as it varies from month to month. Still, I'll give it a go.