Should we sell our house and rent??

thecassman86

beanielou wrote: »

But if you have no likelihood in changing IO to repayment in my opinion it remains as if you are renting.
That is my view & we can all have our own views.

I generally agree with you - you've no more financial ownership of the property when interest only than when renting... But what about house value? I mean, if i bought a house for £200,000 with an interest only mortgage the house value could still rise to £230,000 (for example) and be sellable for a profit...

But yes, i agree that interest only mortgages are not a good investment in terms of home ownership. Personally, if i couldn't afford my mortgage then i'd sell and rent before going interest-only. But, as you say, it's all down to individual opinions i guess.

yorkieboywow

one other consideration you might want to make, is catchment areas for schools, if by selling and renting in another area your children will qualify to attend a better high school when the time comes, it will be easier to reassure yourselves you may have done the right thing for all concerned.

therixonator

beanielou wrote: »

But if you have no likelihood in changing IO to repayment in my opinion it remains as if you are renting.
That is my view & we can all have our own views.

One scenario means you borrow money and invest it into property, and the other means you don't. When you come to sell the property in the first scenario you might make a significant profit or loss. This can't happen with renting as you never bought anything to sell. This is not my opinion, this is fact.

sourcrates

fastnet wrote: »

- This would mean that we could start to rebuild our credit file and get back on track within the next 5 years rather than 15 is we go down an IVA route.
- o
Fastnet

Hi,


Who told you an IVA would take 15 years ?


because that is completely untrue,


an IVA normally lasts for 5 years, you agree a monthly payment you can afford, and after 5 years, you are debt free, the rest of the debt is wiped out, you may have to re-mortgage in the final year to release more funds to your creditors, but to me its the best option for your circumstances, in your situation I think you should of done this years ago instead of a DMP which was never really right for your situation, I would certainly get some better advice than you appear to of been given about your options before you make any hasty decisions.

Monkeyballs

Hi Op,

I'd be reluctant to sell the property as well but as I'm now 37 (38 next month) and have several times had the opportunity to get on and decided against it for one reason or another I get all misty eyed about the idea of owning my own home LOL

Rather than advise on whether to sell or not, how about an alternative?

Do you have any friends or family who are in the building trade or have experience of more serious (successful) DIY jobs? Have you considered the possibility of putting up a stud wall in one of the bigger rooms in your house to split it in two?

Ok so there is an expense but it'd be no more than a few hundred for materials and maybe £50 backhander for the work?

It may mean having a re-jig of rooms but it's a cheap alternative to an extension or conversion if you have a suitable room?

Oh, btw - chuck up an SOA so we can have a look and suggest some other savings

MB

loveka

If you love your house, don't sell. You will be getting off the property ladder for one thing. I just think you have got too many options to get rid of something you value so much.

You have a great opportunity to save for full and final offers now your finances are better. Carry on with what you are paying on the DMP now, be frugal and save as much as you can. Put a stud wall up as above to tide you over.

Or -carry on paying what you are paying now and save up for your extension. If you areffrugal you could probably save at let half of one of your salaries.

Planahead

Dear Poster
Given the way things are at the moment with folk struggling to get onto the housing ladder I would caution against selling as you may never get back on the ladder again. I know it's not the be all and end all - however - your house is an asset and if it's grown in value recently then it is more than likely to do so again. Plus the uncertainity of renting can be daunting. As the OPs have said - you both earn fantastic salaries - the priority should be on surviving on one [seriously no holidays, outings, clothes [go to the charity shops] and absolutely no non-essential expenditure - so forget your Costa coffee etc, ] salary and using the other to pay back the debt. Your children are still very young and can manage in one room, if all else fails - partition as the OPs have said. You love your home so stay in it. When things pick up and your debt is paid you will have an asset and will be able to extend/have a loft extension. I know it is hard but living on a very tight budget for a couple of years will do it. We manage with one car [shift work so need it!] and have bought a bike for commuting to save on the very expensive bus fares, it can be done but there will be a lot of adjusting. Good luck.

kerensa666

If you rent, due to your past credit issues, you are unlikely to be able to pass a standard background check to be able to rent a property. You will more than likely have to pay 6 months rent upfront as a result of this.

I do think selling would lift a weight off your shoulders by paying off the debt. However, if renting out the property would cover the mortgage, have you seriously considered this? I know someone has previously suggested it. I've been renting my house out for nearly 6 years as it was in negative equity. On an interest only mortgage too. It could give you more options in the future, especially if it rises in value. Maybe if your situation continues to improve you could remortgage the house in the future.

Whatever you decide - good luck!

longtermplanner

This is the only website I have seen that talks about this sort of difficult problem http://debtcamel.co.uk/hard-choices/sell-house/ .

An IVA would take 5 years, or 6 if you are unable to remortgage in the the 5th year. I assume you meant a DMP would take 15 years. But an IVA may not be approved by your creditors as you have so much equity.

It doesn't sound as though you can stay in the house for 5 or 6 years because of the space problem. And your IO mortgage means that your situation isn't going to get better. So if you have to move, probably the sooner the better?

What would it cost you to rent? You need to find that out.

This is the only website I have seen that talks about this sort of difficult problem http://debtcamel.co.uk/hard-choices/sell-house/ .

jillc

If you can afford considerably more than you are paying on your DMP and you aren't actually being hassled by the creditors, then save the extra money and do your loft conversion before you increase your DMP payments. You must make sure if you go down that route that the loft conversion will add value and Building Regulations are adhered to otherwise you'll devalue your house.

You said you had tried to remortgage but they wouldn't let you but if you aren't paying interest on your debts that's the cheapest loan you'll ever get. If you can live with your mortgage of 190,000 just think of the debt as another mortgage and slog away at it. Once you loft conversion's done increase your DMP but don't put all your spare cash there, you should also start a savings pot then when you have enough you can pay lump sums off your mortgage.

Good luck.