Do we sell our home?

Mrs_Confussed

We brought our house about 8 years ago and pretty much got into debt soon after as it needed a lot of work and we could not borrow enough on mortgage, what with cost of living for us at the time. We were given some bad advice and had also taken out an unsecured loan along with our mortgage to supplement the shortfall in our borrowing.
8 years down the line with baby no 3 on the way, our day to day living has vastly improved and our outlook for the future more positive. We have around £25k in a DMP, plus £30k on the unsecured loan which we have also been forced to include (we always thought of it as part of our mortgage & now it is in our DMP)! Anyway I am seriously considering releasing the equity in our home to cover a majority of our debt if not all and start again. We are outgrowing our house now with no chance of moving. We would of course have to rent. I am unsure what our best option is but being debt free seems like a start and this in my eyes is the only way! Any thoughts?
The rate we are going we'd have nothing to leave our kids except debt!!! Looking back we were very clueless & just went along with bad advice. We did not know how to budget and things spiraled out of control. We understand everything now but it has been a hard lesson to learn!
Any advice welcome.

January2015

How long is left on your DMP?

I personally wouldn't sell and release equity. You will find it difficult to get on the housing ladder again.

Nothing wrong with renting, but all the time you have been in the DMP your house has been building equity, whereas if you had been renting it would have been money with no return other than the roof over your head each month. Look at rental prices and compare with your mortgage - is their much difference, and then think about that difference long term.

The house may be squashed with you all in and baby no 3 on the way (congratulations ) but it is your home. You say your day to day living has improved so I assume living on the DMP is manageable. Consider decluttering and look at the space you have.

When we were younger and had four children in a 2 bed house we managed because it was what we had, it was ours and it was all we could affored. We took the smaller bedroom and had to climb over the double bed to get in, but we did it. The kids had the big room and my hubby built a 3-tier bunk bed for the kids (which I believe you can buy now).

I know selling up and releasing equity to clear the debt sounds like an instant win, and it's a decision only your and your OH can make but my personal view is I wouldn't do it regardless of being squashed in with the kids.

bossymoo

I agree with the advice above. Renting comes with its own costs, and is often more than mortgage payments forh e same size house. at least you have the house, which will improve in value. Just think about using your space better and overpay / save where you can.

Realistically if your debt vanished overnight would you retain the lessons you've learned? Or do you think the debt might grow again?

I wouldn't give up the security of my own home unless there were no other options xxx

Good luck and congrats!

Mrs_Confussed

Thank you, I am so confused. We have been in debt management for about 6 years now. We haven't cleared much really and don't look to clear it up until retirement. We don't pay a huge amount each month but it is manageable.
As far as space goes your right you do manage and I am sure once we have decluttered as you say we can manage.
It is a hard decision. I watched my mum struggle to keep her house for us kids. She is still in debt at 65 and will never pay off her mortgage, she can't enjoy her retirement. It is a hard decision, as you say it is our, our family home. I suppose it is weighing up all the pros and cons really!
Thank you for your advice.

solentsusie

I definitely agree with the above.

I presume you would look at moving into the private rented sector which is a minefield in itself. You have no guarantee of getting a long term let and the costs of moving every 6 months/year can be astronomical. There is no security. Whilst it might look good as a quick fix with three little ones I wouldn't be looking at giving up my home just for an extra bedroom.

Making better use of what you have will be a challenge but I am sure you will cope.

Good luck.

Mrs_Confussed

Thank you. I do think we have learn a massive lesson, I never intend to repeat. I want to teach my children the things we didn't learn. How to budget and not push them into a situation they can not afford at the time as we were. Our mortgage payments are high so yes we can rent for around the same or a little more for an extra bedroom. I am really torn with this!

To be honest when i think about it is more about clearing the debt to start again than the space. That is just an secondary thought.
It does worry me private renting. I have had good and not so good experience so myself in the past and I didn't have a family to look after!

January2015

What you need to remember is that the early years of DMP are slow but as kids get older and you possibly get part time work etc and salaries increase you may be able to increase those DMP payments and the DFD becomes earlier and earlier.

You don't sound too near retirement - so that's a long way off and you are already dealing with the debt. As long as you don't have an interest only mortgage you will clear the mortgage and be able to either move/upsize eventually or if you choose to stay where you are will look forward to enjoying retirement without worrying about a mortgage (and no neverending rent payments).

Think about the space you have - as I said my DH built a 3 tier bunk for our kids - which they loved but he also floored out our loft for a playroom (he did put in a velux window we got cheaply from Freeads (ebay didn't exist then). I was lucky he was able to do this but ask friends and family for help with your ideas Good luck with everything

in_need_of_direction

My concern re renting is that if you had to move from property to property, not only would it be costly but it could be disruptive to schooling. Is your dmp through a charity or do you pay for it?

Mrs_Confussed

Thank you January 2015. I do feel more positive having heard your story. I think I will talk to my mortgage company re any implications around the unsecured loan as it does seem to have some impact on our mortgage. If we will be able to release some equity or do anything whilst this is with our DMP. We are a long way from retirement at 35, that was me being negative! I do already work full time but can see a brighter career future for both me and hubby with some hard work.

Our debt management plan is through pay plan so no fee thankfully.

January2015

Well done on the progress to date with DMP. Now you've found the DFW forums come back regularly - it is so motivating (says she who has only been here just over a month ) Whenever you have a down day just read or post and the fog lifts. There are so many others in the same situation (different levels of debt / different times to DFD but all here for the same reason).

I've found a whole new band of virtual friends I can be open and honest with about my debt for the first time - that is an amazing feeling and I can honestly say this forum makes me smile everyday - that hasn't happened in a long time.

I'm looking forward to getting to know you and join you on your journey to becoming debt free and seeing what fab ideas you think of for your house

Mrs_Confussed

Thank you. After lack of sleep last night through worry it has been a positive morning! Talked to hubby and we are going to put positive plans in place. I will definitely use forum again.