Advice wanted/needed

Messi_2

Hi there!

I've been lurking here for months, got some great tips by the way, but this is my first post. Just looking for a bit of advice.

I have a debt totalling just over £24,000. I have three creditors and currently have an agreement with each of them where I'm paying in total £151 a month between them. One of these agreements is with a credit card company who have frozen the interest on my account. The other two are with debt collecting agencies due to the fact I had my head stuck in the sand at the time my debts were mounting! If things stay the same, I'm looking at 13 years of payments to clear the debt. I'm not in an IVA or DMP as I have a mortgage and was told the property might be taken into account in such dealings. I'm earning an average wage at the moment with no room to increase payments.

Anyway, the mortgage on my flat is £46,000. The flat is in need of some improvements for which I don't have the money. I've recently been told that somebody would be willing to buy the flat for £80,000 in the state it is in. I'm no expert but I'm quite certain I wouldn't get much more than that amount even if the flat was in great condition. So......you know what's coming next!

Do I sell the flat? The way I'm seeing it is, in the short term, I'm getting rid of this weight around my shoulders. The thing is though, can anybody tell me whether I would have difficulties in getting another mortgage should I wish to go down that road again? Any advice would be greatly appreciated!

sammy115

I am no expert but if you coud pay your debts off in full now, you could start rebuilding your credit history straight away. Otherwise you face 13 years of paying your debt with your credit history not getting any better. If you have defaults on your history it may be difficult (but not impossible) to get another mortgage.

if it was me I would sell the flat.

angelavdavis

As sammy suggests, I would sell the flat.

However, before you jump in, ensure you have sufficient income so you can afford the rent and costs at another place before you sell up - you might be causing yourself future problems. I would investigate the going rate for rents of a similar property. Council tax, etc should be the same and energy costs similar, etc.

lynzpower

before you sell the flat to this private buyer for heavens sake make sure you get 3 local estate agents round to do proper valuations. You say you think 80 is a lot, but you *might* be undervaluing yourself hugely so do bear this in mind. EA vals are free, best to make sure you are not losing out.

wherediditallgo

I'd sell too. However, as others have said, make sure you're not doing yourself out of getting a better price for the property. I know it must be really tempting to sell knowing that all the debts could be gone in one go, but you're still entitled to get the best price you can.

When you've had a property for a while, it's easy to lose touch with what the market is actually doing in your area, so getting 3 valuations is the right way to go. It costs you nothing except a bit of time to show the agents around, & you can use that time to ask for an idea of how long sales are taking to go through from offer to exchange of contracts at the moment, whether doing some decorating to spruce the place up a bit would be worth doing, etc. The highest valuation is often the one given to tempt you to sign up with them (but a very high valuation is no good to you if the property sits there unsold for several months), & the lowest can be an indicator of an agent selling property too cheaply to keep the sales going through. I therefore suggest you either take the middle one or an average of the 3 as a good indicator of what the property is really worth, then set your own price just a little below that to hopefully move the sale in the right direction.

You could also go round some estate agents posing as a prospective buyer & ask about properties similar to your own in the same area. That will help you assess whether agents have/get a lot of the same properties for sale, how quickly they sell them, etc. Regardless of its condition, if your property is in a sought-after area & is of a desirable size, it could sell far better than one that might be a bit bigger but in a less salubrious neighbourhood. Do the same as a prospective tenant. All this information will help you set an achievable price for the property that leaves you able to rent for a while without regrets.