Downsize???

RMC76

Hi all, this is my first post so any feedback would be greatly appreciated.

I am currently discussing whether to downsize my property with my wife to pay off our £21k loans/cards etc and free up about £800 a month of cash.

My current property is a 4 bed worth about £230k. We really do not need the space we have but I like the space. We will not need the space in the future as kids are not an option. I have said I still would want a detached house, essentially so I can play loud music, which would be around £190k in our area. The 40k would go to paying costs and debt.

The doubt in my mind is around essentially freeing up capital to pay off debt to improve our lifestyle is a great idea but I will be sacrificing future house price increase on the 40k I am freeing up. In essence I will be paying the same amount for a smaller house each month but will have a better lifestyle. My mortgage is portable and I do not foresee any of the cash freed up being paid in as a lump sum of capital.

What do you think???

[Deleted User]

Is remortgaging on your current property an option ? I know what you mean about space, moving to something smaller isn't easy.

Firewalker

Don't do it. It is better to work out how to pay off the debt without downsizing - downsize after you've dealt with the debt if you still want to.

Paying off debt is very educational and you will have to develop habits that last; if you sell your house and pay off the debt you'll be where you started in no time at all. I know, we've done that (then buckled up and paid off all the debt).

Firewalker

forgotmyname

Start swapping bank account to ones that give you more money or free insurance that you maybe paying for.

Little things help. Because of this site i transferred my standard Halifax current account that i only transferred money into for the direct debit bills and some ebay spends.
Now i transfer money into it to get the reward. Then transfer that to my daughter so she gets a reward then onto the wife and back again.

Daughter also has a Santander account so looking into paying into that one also.

So instead of sticking £750 into an ISA as some pathetic 2% (£15) we get £180 a year from it. Just by paying it in and taking it out each month.

Saving on insurance and phones etc now become fun and a challenge, Rather than its only a couple of £ difference and i cannot be bothered.

RMC76

There is not an option to increase borrowing on my current rate and iI am really lucky to have base rate plus 1.25%, I can port the mortgage though. I guess an all out assault on the debt over the next year would be a challenge as well as rewarding at the end.

Happier_Me

Hi and welcome, you will find this forum friendly and helpful.

Moving house to clear debts is a big step and its not necessarily one I would take, unless my situation was desperate.

It's worth asking yourself these questions, before making a decision:

• Why do you have debt in the first place? Is this a lifestyle thing where you spend more than you earn? If so, is it under control? If not, what's to stop you selling up and building up debt again.
• What are you paying out in interest on your debts? Can you move to interest only deals? Moving house will cost you thousands of pounds so is it really worth it? If your debt is % free or close and you can afford the repayments then I would grin and bear it to protect the equity in my property and avoid moving costs.
• This will free up £800 a month (presumably in debt repayments). Are you budgeting effectively? Can you cut back without significantly impacting your lifestyle and then throw extra at your debt? Batch cooking, meal planning, selling on ebay etc.
• Have you used the snowball calculator to work out what your debt free date is? You might be surprised how quickly you can pay this of, particularly if you can cut back on your outgoings, reduce interest payments etc.

Imagine getting to your debt free date, having paid your debt off over the next XX months. I think this day will be a much more enjoyable knowing you've done this yourself, having avoided moving costs and not sacrificed the equity in your property.

good_advice

A 4 bedroom house for just x2 people does sound a lot.
I think you might be better off in a smaller 2 bedroom place. My reasons are a smaller place will be easier to heat in winter. Less cleaning.

We, here also had the very same chat this week.
The house the same as ours down the road is on the market for £250000. I said if we sold up and bought one for around £215000 we could be mortgage free.
Only, I would move to a new area by the coast and it would mean giving up a job and trying to find a new one.
A gamble on getting a new job!