Should we sell house to clear debts

dadooronronrondadooronron

Hello. I am been lurking for a long time and have posted in the past and received some good advice and things were starting to look up.

However, over the last 6-8 months have had various major problems - partner's job ended unexpectedly and is currently looking for additional work. We seem to be getting pressure from credit card companies again. We had to miss council tax payments for 2 months but have liaised with council tax and they have agreed to let us pay through to next March in order to spread the costs, same with water bill and dont mention EDF as we are having a nightmare with them as they keep taking different amounts on direct debit .

Mortgage is also about 6 weeks in arrears. We missed payment when partners job ended but we are now paying monthly instalments and set amount towards arrears. Mortgage company have been ok - although have charged us some ridiculous amounts in "fees".

This week the car went in for MOT and garage found lots of problems - so has failed. we have spent a fair bit already on the car this year and the mechanic (who is a good guy) - has held off doing this new work and asked us do we want to bother - as he thinks it might be best to say goodbye to the car. However, we need the car - for transporting kids to school (3 miles) and for shopping etc - live in rural area. We have no savings. We borrowed off my partner's brother for the last car repair bill and we are still paying that back.

We both feel that we are just clinging on - waiting for pay day each month (generally struggling a lot the last week before payday) - we are hoping this week that the tesco clubcard vouchers are issued as this will help with food shop.

Is this a decent existence ?? I don't think so. So - now is where I would like to hear some words of wisdom. Our house is probably worth 250,000 but I think if we need to sell quickly we would maybe have to let it go for 220,000-230,000. Our mortgage is 130,000. Don't want to rent as very little to rent in this area but what there is is around £700 per month and don't want to throw money away on rent. Also I am thinking would need to hang on to the mortgage that we have (transport to new property) as due to arrears we won't get another mortgage with anybody else.

I am thinking (my partner has reservations because loves this house) - that we could buy something for about 160,000-170,000 - so that would give us £50,000 (although with costs etc could be more like £40,000). With this £40,000 we could pay outstanding debts, buy a car and have some money to put away. Sounds good to me Would then give us some breathing space and my partner will hopefully get sorted with work soon.

Des anybody think this is a good idea? Does anybody have any other ideas? I am just tired of working for nothing.

Back story on this might be good -in brief - both previously married and ended up starting from scratch in our 30s. We then bought a house and made a profit but then moved quickly and bought another which turned out to be a disaster (on many levels) - lost a lot of money on it. I had some health issues last year and had to reduce hours in work so income dropped a lot. We also spent more than we had - we are both aware of that - we cut up all our credit cards and are both much better now at frugal living (partly as no choice). We dont want to carry on struggling like this - is downsizing the best option??? Any other suggestions would be appreciated. It would be good to hear the views of others who have been in similar situation. Thanks. RON

happycamel_2

In your situation it sounds like a good idea. You've learned to live within your means now so if you can clear the debts, get a small but affordable house and start with a clean slate then I think you'll be much happier overall. A house that feels like a burden can't be enjoyable anyway.

harrys_dad

A really difficult area to give advice. One thing I would say though, downsizing would require you to obtain a mortgage for your new house. Would you get one? Can you speak to your current mortgage provider and see whether they would entertain this? If you are using all the additional equity released to pay off debt then you will need the same size mortgage but it will be a higher loan to value percentage. currently this is 130/230, approx 57%, but would become 130/170, approx 78%. I doubt the mortgage people would wear this.

What is your mortgage payment? How does this compare with possible rent?

Maybe post up an SOA and see what else people can suggest.

fatbelly

harrys_dad wrote: »

Maybe post up an SOA and see what else people can suggest.

I agree. Don't rush into anything yet.

http://www.stoozing.com/calculator/soa.php

beanielou

Just to add to the take your time & think it through vote.

dadooronronrondadooronron

Thanks for messages. I hadn't really thought about the percentage of mortgage to the value of the house - so - yes - I will need to look into that.

As far as I know our mortgage is transferable - so I am thinking that won't need to start again with mortgage but will just take this over to another property. It is on my list to talk to mortgage people this week to sound them out about it.

Renting really isn't feasible. . We would be worse off with rent. We would be looking at £200 a month more if renting.

I don't know what the option is if can't downsize - there don't seem to be any more corners where we can cut. One of our rooms (spare sitting room) is now empty because we sold the sofa and tv out of it to pay a bill.

If anybody has any suggestions - willing to listen. thanks again.

[Deleted User]

Dont assume you will sell your house even at a reduced price as quickly as you may like to,other than that it may well be the only way

gizmo111

Are you making full payments to your debts or are you on a DMP?

Building_Surveyor

if you have an empty room rent out as an additional bedroom maybe?