second property versus credit cards and loan debts

Mollie_Guinness15

I'm in the position of having two houses, one I live in, and one I rent out. The rented one has around £20k equity in it, and the rent pays the mortgage with about £150 to spare each month.
I also have £23k in credit cards and loans.

My dilemma is this, am I better selling this property and paying off all the debts (except for around £3k). Or as it is an investment with equity in it, should I keep it and just work hard at paying off the other debts, while holding on to the 2nd house?

It's a tricky one!

Any thoughts gratefully received.

mjdh1957

The trouble with using property to pay debt is that lots of people don't address the fundamental problem (which is spending more than we earn) so end up in worse debt and no asset.

The same applies to consolidation (did that myself )

If you paid off your debts, are you able to live within your means?

Or, if you start to live within your means, are you able to pay off the debt and keep the second house?

No easy answer...

CLAPTON

how much are you paying to service the debts each month and how long will it take to pay them off at this rate?

your rental property brings in 150 a month.. is this a real net figure takign into consideration voids, repairs etc.

in_over_my_head_2

You don't say how you are managing with your debts, are you struggling or coping ok? The £150 a month this property brings in must come in handy.

I'd be inclined to try and hang on to the house, but if you really want a clean slate to start again then obviously it needs to be sold - you may even get an extra £3k to pay all your debts.

Mollie_Guinness15

I'm coping with the debts and paying off more than the minimum each month.
I've just read the money tree book, and am now acting on it... my lightbulb day as you put it is today - at £23K.
I have taken on some freelance work in my spare time, I'm a web designer and photographer - and I will be using all proceeds to pay off these debts with the highest interest rate ones going first.
Thanks for the advice - I will, I think keep the house. But I guess it's always there to fall back on and that equity will keep creeping up.