DFW's that have sold their home - advice please

clarab_3

Hello lovely people...

Im at a bit of a crossroads right now - have finally got to the point that selling my home would cover the remainder of my debts, if I chose to.

The facts are -

• This is my first home that I've owned for myself - I'm hugely emotionally attatched to it, but I am getting past that, Have invested a lot of time and money in doing it up.
  
• There would be a £3500 early redemption fee on my mortgage if I sold now - this expires in January 2008.
  
• If I rented my flat out, it would cover the mortgage (just... I realise there are other potential costs of renting out which are unpredictable)
  
• I still need to live somewhere! Would be unlikely to be considered for a mortgage for several years - cant help but feel moving back to renting may be bad move.
  
• New roads and amenities being built in my area in the next two years hold promise for house prices in the short and medium term.

How did those of you that have sold up or rented out your homes and downsized deal with these decisions?? Any questions I should be asking myself?

Curious_Moose

Why not get a lodger and then sell when the redemption penalty expires.

DavidHM

You've paid off 52% of your debt in 18 months whilst maintaining your mortgage.

As your debt reduces, so does the amount of interest to pay and the next 48% will be gone even sooner, unless you've had large and unrepeatable lump sums.

You're on the property ladder now and it would cost you thousands to get off it even if property prices stayed the same - but you feel the outlook for appreciation is good (well, it's only good if you remain a homeonwer).

You say that if you rented you'd still have to pay as much as you do on your mortgage to get somewhere equivalent.

It sounds to me (although obviously I don't know your full circumstances) that you've come through a bad patch and now want to be free from the millstone of debt - which is fair enough - but long term I think you're already on the right path without making any drastic change like selling up.

lynzpower

I sold my place. Albeit not because I wanted it to clear debt, I would have done so anyway, but more that I didnt feel it moneysaving paying a mortgage. With rising interest rates, it just wasnt good value for money.

I sold up, making circa 40k after costs, and am paying 1/2 what we would of on the mortgage by renting.

No biggie for me really.

clarab_3

DavidHM wrote:

You've paid off 52% of your debt in 18 months whilst maintaining your mortgage.

As your debt reduces, so does the amount of interest to pay and the next 48% will be gone even sooner, unless you've had large and unrepeatable lump sums.

You're on the property ladder now and it would cost you thousands to get off it even if property prices stayed the same - but you feel the outlook for appreciation is good (well, it's only good if you remain a homeonwer).

You say that if you rented you'd still have to pay as much as you do on your mortgage to get somewhere equivalent.

It sounds to me (although obviously I don't know your full circumstances) that you've come through a bad patch and now want to be free from the millstone of debt - which is fair enough - but long term I think you're already on the right path without making any drastic change like selling up.

Thanks, I think I know in my head that you are right, I think the same part of my brain that got me into debt (the "want it now" part of me ) wants me out of debt in exactly the same speed!

I guess I have to stop thinking short term. This might just be the point in my payback plan that its starting to get tough and slowing up and I have to force my way through - I just needed someone else to tell me that.

DavidHM

Here's a nice thought: if you remained in debt for the next year, until the redemtpion penalty expires, and only ever made the barest minimum payments, you'd still pay less in interest than the mortgage redemption penalty.

lynsayjane

clarab I have to agree, selling your house doesn't seem like a good idea from the info you just gave us. I know it's hard when it feels like your getting nowhere with your debt, but owning the property is a really good investment. I knwo the feeling of being attached, this is my first flat, I bought it at 19 and I don't know if I'll ever be able to sell it. I've had it for over five years now and I still love it!

Going on what you said at the start of this thread the positives with keep ing the house far outweigh the positives of selling it. If you need more persuasion actually write out a list of positive and negative for each option, be totally honest, then see what you decide at the bottom.

Good luck whatever you decide xx

clarab_3

DavidHM wrote:

Here's a nice thought: if you remained in debt for the next year, until the redemtpion penalty expires, and only ever made the barest minimum payments, you'd still pay less in interest than the mortgage redemption penalty.

jeez, well that brings it straight home doesn't it!! :eek:

Many thanks for such good advice!

clarab_3

lynsayjane wrote:

clarab I have to agree, selling your house doesn't seem like a good idea from the info you just gave us. I know it's hard when it feels like your getting nowhere with your debt, but owning the property is a really good investment. I knwo the feeling of being attached, this is my first flat, I bought it at 19 and I don't know if I'll ever be able to sell it. I've had it for over five years now and I still love it!

Going on what you said at the start of this thread the positives with keep ing the house far outweigh the positives of selling it. If you need more persuasion actually write out a list of positive and negative for each option, be totally honest, then see what you decide at the bottom.

Good luck whatever you decide xx

Thanks L, I think sometimes just having noone to talk to about the debt sends my head into overdrive! I always get the best advice on here and I know I can trust it.

sukey13

Depends what you are currently paying on your mortgage. You may be able to sell and rent back, reducing your outgoings and giving yourself tax free cash.

I do think using the government's rent a room scheme is a good idea though. Taking in a lodger can make you up to £4250 a year tax free...

http://www.hmrc.gov.uk/individuals/tmarent-a-room-scheme.shtml

It's pretty easy to find a housemate too - see easyroommate.co.uk or letalife.co.uk

Good luck!

System

Dont sell the house. It may seem like a quick fix. Its a marathon not a sprint. Lenny