Should we Sell Up to Start a Fresh?

Bob64

Hi everyone, my wife and I are coming up 50 next year... We have had a few challenges in life as well as still having 3 of our 4 children still living with us (aged 7, 15, 24). We have managed to build up debts in excess of £24,000 and live in a mortgaged flat which we hate as it's in a bit of a dodgy area. Our kids don't go out as it's not safe to do so. Have had my car windows broken so many times .

The thing is... We have no savings, and this flat was supposed to be our little nest egg for retirement funds. But after the latest troubles in the area (taken our 15 year old out of high school for his safety) we are at the end of out tether. We are sick to death of worrying about our kids and our general safety as we get older.

We have about £25,000 equity on the flat and considering selling up and moving away from this hellhole to start a safer fresh start and private letting.

Would love some input from the many wise people within these forums as we really don't know what to do for the best? Want to sort ourselves out while we still can.:(

loveka

Hello. This sounds really stressful. If you really don't like the flat and area then you plan is a good one although I would normally never advise people to sell their home to pay off debts.

Would renting it out cover the mortgage? If you rented it out you would still have your asset for your pension, as long as you can afford to pay your debts and a private rental as well. Some friends of ours did this recently and it has worked really well for them. Good luck.

Growurown

We did this, sold our house and moved into a rental property. I love where we live. I could never have afforded to buy it but can afford to rent it, but being in a similar age group to yourself I am concerned that in our retirement we are going to be in a much worse position because we are still going to be paying rent out of our pension. We won't be able to afford to stay where we are when we retire, the rent is much too high and the house is much bigger for our needs now the children have left home so I don't mind downsizing.

I do regret selling our property. I wish we had hung onto it and say rented it out, but at the time we made our move the rental market was in the doldrums and we couldn't afford the upkeep on it if we couldn't let it out. We didn't want to take the risk so sold up.

How long have you got to go before the mortgage is paid off? If I were in your position I would rent the flat out and move to a nicer area and rent. If I was struggling to keep up with the debts I would explore my options to pay them off. We are currently on a debt management plan with Step Change to pay off our debts and it is working very well.

Once your property is sold you will never be able to get back on the housing ladder, and that is the one thing I really regret about our situation.

Bob64

Hi loveka, thanks for the input... Stress is an understatement at the moment hence why I am on these forums looking for advice!

Unfortunately your suggestion is not an option as renting what would have to be a 3 bedroom property in a better area would cost more than our current mortgage. So as we are already adding to our debts in our present circumstances there is no chance we could survive renting out as well as moving into a private let.

Hi growurown, I would love to keep the property and rent it out but we have far too many debts over and above our mortgage. And when you look at the legal side of things... Renting out means paying taxes as a landlord as well as the letting fees etc. We still have 9 years until the mortgage is paid off which seems so far away at present.

nomunnofun

Bob64 wrote: »

Unfortunately your suggestion is not an option as renting what would have to be a 3 bedroom property in a better area would cost more than our current mortgage. So as we are already adding to our debts in our present circumstances there is no chance we could survive renting out as well as moving into a private let.

But would the rental payments be greater than your current mortgage plus current debt repayments? Just a thought.

Bob64

Hi nomunnofun, the rental would be about the same or slightly less than we pay for the mortgage.

nomunnofun

Bob64 wrote: »

Hi nomunnofun, the rental would be about the same or slightly less than we pay for the mortgage.

So, in theory, you could sell you house and pay off all of your debts and be better off by the amount that you are currently paying each month to service these debts?

Effectively you would indeed be starting afresh without the additional worries regarding your child.

oldhand

Think you may have answered your own question,your living in a hellhole where your kids cannot go out.Thats more existing.Your still relatively young and your children deserve somewhere to grow up safe which will also be a big help to you so my advice for what its worth sell up and move to a better place.
Use it as the chance as you say to start afresh with new goals and ideas,you will feel far better for it.If you stay can you see things ever getting better? and if nothing else the advice I gave to one of my daughters who was worried sick about emigrating to australia,Its better to try rather than in ten years time thinking what might have been.(she went and loves it).good luck.

Bob64

Yes nomunnofun, we would be able to clear all our existing debts by selling up and renting. By doing this we might even be able to start saving for the future.

Oldhand, I suppose you are right...

I have answered my own question, I was just needing confirmation that I was doing the right thing and not jumping the gun by throwing away what little assets we thought we had.

We'll just have to make sure that debts are a thing of the past when we make our move. Thanks for your input and wisdom.

Growurown

Bob64 wrote: »

Hi loveka, thanks for the input... Stress is an understatement at the moment hence why I am on these forums looking for advice!

Unfortunately your suggestion is not an option as renting what would have to be a 3 bedroom property in a better area would cost more than our current mortgage. So as we are already adding to our debts in our present circumstances there is no chance we could survive renting out as well as moving into a private let.

Hi growurown, I would love to keep the property and rent it out but we have far too many debts over and above our mortgage. And when you look at the legal side of things... Renting out means paying taxes as a landlord as well as the letting fees etc. We still have 9 years until the mortgage is paid off which seems so far away at present.

The debt over and above your mortgage can be sorted out by other means. You don't need to sell the flat because of these debts. This is the mistake we made:(

I understand the predicament though of not being able to let the flat for an amount that would cover the mortgage. However nine years isn't a long time really, and if you sort out the debt issue to include renting the flat out and you renting another property you will be fine. I know that selling looks like the best option at the moment, it did for us, but now I think it was a big mistake. If we had hung onto our house we would own it outright now.

Bob64

Hi again growurown, I know where you are coming from and I love your enthusiasm for keeping hold of the property and paying it off but you are now referring to debt management which wrecks your credit rating for at least 5/6 years... We have already been there in the past and it takes a very long time to recover from that believe me. Blacklisted for 5/6 years then the same again to rebuild your credit rating.

When you are on incomes such as ours and approaching 50 with young kids, being blacklisted for years is a terrible thought. I'm not saying I want to build up debt again but I drive so need a car now and again so being credit worthy is nice for that purpose. Having a credit card for purchases online is a handy thing to have although lots of places accept PayPal and debit cards now.

No... I think I'll have to cut my losses and accept the fact that saving for my future is the only thing left now for pension/retirement purposes.

Time to start a fresh while I still can.