Sell house to Pay off Debt and Rent short term.

andyfromotley

Hi parameter.

your plan is crackers. The costs asociated with selling, buting and renting are mad. What if houseprices rocket in the year or two you are off the ladder? you wont have enough for a deposit and you will have missed out on the growth in value by not owning a house. You are in a big hole but luckily for you you also have a very large shovel too.

If you make some savings and throw everything at the debt you will have it cleared in around two years, and you will still have all that lovely equity in your house!!

you really need to fill in an SOA and then you will get some solid advice.

tlc678910

I think you should continue with the debt snowball and not sell up. While you are paying a (repayment) mortgage you are building on the equity in your house. If you are paying rent this money is gone. If your timescales proved optimistic and you were renting for a few more years than you expect you could miss out on tens of thousands of equity and the security of having your own home.

A new baby doesn't require more space or their own room. You have plenty of time to pay off your debts, let your equity build and in 3-5 years time you could be looking at moving with savings and 40-50k of equity. While you are concerned about simplifying your finances when the debt is paid off they will be very straightforward.

Good luck
Tlc

Parameter

Must say I like the big hole , large shovel analogy Andy , does put things into perspective.

LittleDutchgirl

If you're snowballing successfully then I think you should carry on. As others have said that will tidy up your credit history should you want to take out more credit sometime in the future.
The difference between 14 months of snowballing and 12 months renting and saving is nothing in the grand scheme of things but stepping off the housing ladder could be something you really regret later.
Good luck
LDg

andyfromotley

Parameter wrote: »

Must say I like the big hole , large shovel analogy Andy , does put things into perspective.

Ha, not mine i'm afraid, stolen from Dave Ramsey. Check out his podcasts he gives great, simple advice for getting out of debt. Hes also good for motivation.

(he's not so clever on investing apparently so ignore him on that!)

DandelionPatrol

Parameter wrote: »

Thanks for the reply but this isn't the issue , we don't plan on tackling the debt with no pocket money so to speak, we are not in any kind of rush in that respect , we have been paying 1k to 1.5k a month towards debts for the past 2 years.

We are simply asking whether we should continue with the debt snowball for 14 months or sell up , clear the debt and save for 12 months, tidying up our credit report in the process.

Others have commented negatively on your plan, but no one seems to have picked up on this aspect:

From what you have written above, it seems to me that you are well aware that you could clear your debt and stay in your house - but you do not wish to do this without having pocket money.

Essentially, then, your plan is to sell up your house and rent and save up the deposit for another house, so that you can have some pocket money. And you would do this knowing that you would have all the expense of selling [1.5% to the agent?], Energy Certificate, ERC, Solicitor and buying, solicitor, searches, mortgage application, stamp duty and 2 lots of removals.

That is possibly £10,000 of costs to get your hands on £25,000 of equity. Obviously, having pocket money must be incredibly important to you, so I think you should go right ahead, although I would not do this myself. But please don't delude yourselves that it was for any reason other than to make sure that you have some pocket money.

Parameter wrote: »

We are mainly considering this as we have 13 lines of credit and want to reduce this to just one (the loan) thus making our previous 12 months accounts look healthy when it comes to a mortgage application. (We are aiming for a property around 220k btw)

We currently have no dependants but are trying for our first child so also want a clean bill of financial health before any kids arrive..

If you don't do this, you won't need another mortgage for a little while. If you remember that you will still have to find £10,000 to carry out your cunning plan, you will probably find that you could have those 13 lines of credit cleared well before you would be ready to buy under your cunning plan.