Selling up to rent

chewmylegoff

so, if you have got 72% LTV, then you presumably should be able to remortgage in a year so that, even if you cannot release equity to pay down credit cards, you would surely be able to get a mortage with a much lower interest rate. it does depend how large your mortgage actually is as to how much you would save because of mortgage arrangement fees- but you could be looking at getting on for halving your interest rate next year assuming the same sort of deals stick around.

personally i would also look at the pension contributions unless they are matched by an employers contribution, it may be worth you suspending them to pay off the credit cards.

if you can have some kind of relatively short term economy drive, freeing up as much income to pay off credit cards by making personal sacrifices, and looking into other money saving options (switching utilities, better phone contract and all that other stuff, getting cheaper personal loans to pay off the credit cards) then that might be preferable to selling your home and renting for 5 years. if you will be able to get a better mortgage rate it may be that the max you would have to put up with this for would be 12 months.

edit: think about stamp duty as well - not sure how much your house is worth, but you need to factor that into your calculations.

franklee

wood_pigeon, Your figures on the sparse information given look worrying to me. Your house price has gone up by 1.5 times yet you're only at 72% LTV. Meanwhile you have 1K per month to pay for credit card debts despite a 33 - 40% gross increase in your income over the last two years. Now you want a sell to rent fix to your debts. I would not do this unless you get your spending under control as otherwise what's left of your 65K equity will disappear. How big are the credit card debts and where did all the money go?

Anyway how near are these figures?
House now worth 230K.
72% LTV, 165K mortgage, 65K equity.
Purchase price 153K.
Owned for 12 years.

So has the mortgage gone up and not down in 12 years to fund substantial home improvements? Has the expenditure that caused the debts stopped? Is your mortgage affordable by salary multiples and do you like the house, is it convenient for work etc.? I think you need to forget doing your rough calculations and do a proper soa and then post that on the debt free section. I think your starting point is to examine your outgoings.

Holls1981

How much is your CC debt????

anselld

Continue with mortgage - own your home at the end of mortgage term.
Rent - own nothing at the end.
This is the fundamental difference.
Also, if you have been tempted by 0% interest offers to spent beyond your means in the past, think how much more difficult it will be to hang on to that short term money in the bank.

Leew1231

I'm doing the same, selling to pay off debts. I would rather save the money I would be spending paying off credit cards and therefore just paying interest. I will then save and use it for a house purchase later in time when I am better financially.

wood_pigeon

Chaps, thanks very much for the great advice, both pro and con my controversial plan.

Certainly for the moment, I'm staying put, and sticking with the mortgage and massive monthly cc payments. The Mrs, after initial positivity, didn't fancy the prospect of paying rent till death. Also, some discussions with local letting agents suggested that our massive, hairy dog would have presented a substantial barrier to securing a letting, certainly at short notice, as would have been the case with this plan. The dog, and a few other smaller animals are non-negotiable for me.

So, good news for the shareholders of Barclays and MBNA, and I can look forward to many years of relative poverty trying vainly to reduce our cc debts.

Thanks again for the advice.

Cheers,

Woody.

pinkteapot

Have a look at the Debt-Free Wannabe board.... Loads of advice there on cutting spending and paying off debts.