Sell to clear debts??

Bernie04

Will try to keep this short, me and my partner have around 40k of debt in debt management plans, as at the same time have 45k ish of equity in our house. Would it be best I sell the house, clear the debts and then rent, then start fresh and save for a deposit? The thought of being debt free is nice, but the thought of renting isn't! We cannot get a new mortgage anywhere due to credit rating so downgrading isn't an option. Any ideas? What would you do?

cocopops21

That's a tough situation. I don't know what the right thing to do is but if I could sell something to get rid of all of my debt I would absolutely do it. Starting fresh and debt free is a wonderful feeling. I felt it once when I paid my credit card off.

Renting isn't always bad (just mostly!). It's only temporary if you're saving up for a deposit.

DVardysShadow

Bernie04 wrote: »

What would you do?

I would do a Statement of Affairs.and post it on the DebtFreeWannabe forum http://forums.moneysavingexpert.com/forumdisplay.php?f=76

http://www.makesenseofcards.com/soacalc.html

When you have filled it in, click 'Calculate' on the Statement of Affairs form, click 'Format for MSE'. This gives you a popup window. Click 'highlight text', right click on the highlighted text and copy the highlighted text including all formatting codes. Paste the copied text into a post for other posters to comment

If you can fight your way ut of this and keep the house, it is better in the long term. But there is no point in fighting on if you will end up losing the house as a repo. So do the Statement of Affairs and then decide.

themull1

I would do a statement of affairs, and try and get the debt down without selling your house. People on here have cleared far more, and if you list an SOA there are loads of people here to help you.

princeofpounds

Hi Bernie,

it's not a straightforward question. A lot will depend on precisely what you are paying on your debts, what you are paying on your mortgage, the cost of renting an alternative place.

Then you also need to think one step beyond the current situation. For instance, your mortgage rates might change. Or as you note you may struggle to get another mortgage for several years due to your credit record.

But, specific considerations aside, if I were making headway at paying down the principal amount of the debt then I would generally edge towards keeping the house. If I were having problems doing anything more than service interest then I would be looking more closely at selling.

Bit more detail would be useful. And I back up checking out the DFW subforum here.

Mortgage_Reduction_Novice

I'd say 45k ish is quite close to 40k ish so be careful... you may end up selling for a lesser amount leaving some debt still to pay. Then there's fees. So you may reduce your debt but not wipe it completely. You'll still be paying a monthly amount for accommodation - how do rental prices in your area compare to your mortgage payment per month?

paddyrg

Renting isn't bad at all - it is what you make of it! If you rent a shared flat in a crack den you'll have a very different experience than renting a flat on Sloane Street compared with renting a gatehouse of a country estate. Renting, you can do/try all three! Moving house is a couple of days work, not an ordeal! The boiler always works! If you want to take a job on the other side of the country...you can! I have moved and worked all over the country, and loved it. You can always find nice and interesting places to rent, you can rent places you could never afford to buy, and if you are really down on your uppers, you can get a bit of help with rent.

It really isn't the nightmare some people fear it to be - there are a lot of upsides!

BitterAndTwisted

If I could hold on to the property by any means possible, I would.

Finding a landlord willing to take you on as a tenant while being on a DMP will put you at a terrible disadvantage. If you can find one at all.

mrs_motivated

Hi Bernie,

I sold up and cleared debts, although I still had a decent amount of equity left. Been debt free feels great . I have been renting for the past nine months (something I have never done before) and its been great. It's a cottage I would never be able to afford to buy and a few weeks after I moved in the combi boiler stopped heating the showers. Landlord sent a plumber, who sorted it the same day and bought me a bunch of flowers and a bottle of champagne to say sorry for any inconvenience. So renting can be good

Do try the debt free wannabes though, they helped me tremendously

Yorkie1

Mortgage_Reduction_Novice wrote: »

I'd say 45k ish is quite close to 40k ish so be careful... you may end up selling for a lesser amount leaving some debt still to pay. Then there's fees. So you may reduce your debt but not wipe it completely. You'll still be paying a monthly amount for accommodation - how do rental prices in your area compare to your mortgage payment per month?

I was going to say this.

paddyrg wrote: »

Renting isn't bad at all - it is what you make of it!... The boiler always works!

The boiler doesn't always work according to numerous posts on here! :eek:

robatwork

mrs_motivated wrote: »

Landlord sent a plumber, who sorted it the same day and bought me a bunch of flowers and a bottle of champagne to say sorry for any inconvenience. So renting can be good

Wonderful!

Can't help thinking you don't have a typical landlord