Frustrating times

serious_steve

Hi All. My wife and I are currently try to sell our house, we currently have about 137K left on our mortgage and our house is on the market for 139,995. We need to move as we have a small 2 bedroom house and need to get somewhere bigger as we have a 3 year old and are hoping to start planning for another soon.

We both earn well (wife 40k and me about the same although I am employed by an umbrella company as am on contract work for at least a year). The trouble is although we are currently earn well we are paying about £800 a month for mortgage, £700 for child care and the worst bit £800 on 2 loans (about 4 years on both to complete.) We are also £3k overdrawn although this is improving due to my better paid job.

We feel that we may have to rent for a while as we are unable to get a deposit together due to our high outgoings although we don't really want to do this it seems like it might be our only choice atm.

Just wondered if anyone had any thoughts on our situation or if anyone has been in a similar situation. Thanks for reading

hamster2013

you are in debt, by very much indeed.... it would not be wise to endebt yourself even more with a mortgage.

furthermore, i would hope no sensible bank would loan monies in such cases which would be setting a time bomb active.

my thoughts, as you are asking for them:
1. clear your loans - you both are earning £40k/annum - which should be around £5k/month net! much more than what I run my household of 3 kids and wife on one income!

if you pay £700 on childcare, that leaves you with £4.3k / month.
You can comfortably 'survive' on under £2k all included + rent
so if you rent a place worth £1k, you should be able to repay your loan and overdraft £1.3k / month - your overdraft should take no longer than 6 months to clear, and your loan that you state is to run for 4 years needs to be repaid before! I would set a target of 2 years to clear that up - depending on how much it is. The more you over pay it, the less you lose in interest repayment.

2. Start saving! if in 2 years you have repaid your dues, you can start saving AT LEAST £1.3k/month, i.e over £15k/annum. So in 4 years time from now, you should have a deposit of £30k ready to purchase your property.

ognum

I am afraid that I think you need to pull in your spending, pay down your loans and start saving a deposit.

You need to live within your means for a while, you both earn well, above the national average and if you can't live within your means in your present property how do you expect to do that in a rental property?

Are you prepared to maybe have to move constantly if you move into rented and have no real security. Are you prepared to not paint your kids bedrooms the colour you want and maybe have to move them from school to school when you get moved out of rental houses.

Just get your heads down, pay off your debt, pay down your current mortgage so you have more equity and don't plan things like more children that you clearly can't afford at the moment.

Sorry I know it's harsh but it's true, time for tough love. just get on with it.

Time to frequent the money saving boards!

chickaroonee

On 80k a year you should still be able to save a lot, even with your outgoings you should be able to clear your debt quickly.

If you have another child there's no reason at all the baby couldn't sleep with you for a year at least, whilst you pay down your debts and save up a new deposit.

Annisele

Are you absolutely certain you want to sell?

You're right to say you won't be able to buy another house without a deposit. Most rental contracts are initially for six months, so you could potentially be moving home every six months - with the associated costs restricting your ability to save.

xylophone

Forget selling the house.

Cut down on outgoings by obtaining the best possible deal on utilities etc and plan a strict budget that will enable you to pay off the loans in the shortest time possible.

Delay conceiving until debts fully paid off?

lessonlearned

As the others have said, selling and go into rental would achieve nothing and would probably make your financial situation even worse. Better by far to ride it out, pay down your debts and try to start overpaying your mortgage.

Sorry but your figures just don't stack up.

Even if you get your asking price of £139, 995 which is doubtful by the time you have paid your fees and expenses you will barely have enough to redeem your mortgage.

You will also incur costs in setting up your rental agreement.

Selling up would be counter-productive.

2 adults and 2 little ones can easily fit into a two bedroomed house for a few years. Although we had enough room for them to have a bedroom each my two loved sharing a bedroom. They used to wake early and you could hear them playing and giggling perfectly happy with each other's company.

There is something else to take into account.

Not sure where you live but it does appear that, after years of being in the doldrums, there are clear signs that the housing market is starting to warm up,

If you sell up now and go into rental there is a very real danger that you will get left behind and would struggle to get on the property ladder at a later date.

My advice is to stay put. If you are running out of space then have a serious declutter (sell some of it to make some extra money to tackle those debts). Invest in some storage solutions to make use of the space you have. Ride it out, pay down the debts and build up some equity.

My husband and I struggled during the recession of the late 80's and early 90's. We just put our heads down and rode it out.

It is by far the better way. Moving now will set you back to the tune of thousands of pounds just getting you deeper in debt.

Go over to the debt boards and the OS boards. You will get some good advice there in how to reduce your outgoings and start paying off your debts.

BazzaDP

Some very good advice here. The OP would do well to take this on board.

ognum

Interesting that the OP has not returned, maybe not what he wanted to hear!

houseimprover

serious_steve wrote: »

Hi All. My wife and I are currently try to sell our house, we currently have about 137K left on our mortgage and our house is on the market for 139,995. We need to move as we have a small 2 bedroom house and need to get somewhere bigger as we have a 3 year old and are hoping to start planning for another soon.

We both earn well (wife 40k and me about the same although I am employed by an umbrella company as am on contract work for at least a year). The trouble is although we are currently earn well we are paying about £800 a month for mortgage, £700 for child care and the worst bit £800 on 2 loans (about 4 years on both to complete.) We are also £3k overdrawn although this is improving due to my better paid job.

We feel that we may have to rent for a while as we are unable to get a deposit together due to our high outgoings although we don't really want to do this it seems like it might be our only choice atm.

Just wondered if anyone had any thoughts on our situation or if anyone has been in a similar situation. Thanks for reading

Your take home is what £4500 a month between both of you, your expenses u have told us are £2300 a month.....do you know where the other £2200 a month is going?

If you concentrated on that you'd sort your debts out very quickly.

Have a look at debt free wannabe

robatwork

ognum wrote: »

Interesting that the OP has not returned, maybe not what he wanted to hear!

Yes it's all got a bit serious for steve....

He didn't say how come they are overdrawn by £3k when income is way above average but this can only point to profligate spending.

Time for some belt pulling-in, socks pulling-up and other clothes related clich!s. Get the debts paid off, pay off a lump sum of the mortgage depending on the interest rate (or save in an ISA)..and look to move in a few years.