Selling up to pay off debts?

Leanne8t3

We were new at it, £400 was the mortgage application fee, then solicitors etc oh and stamp duty, sorry I forgot that. We were desperate as we'd just moved 6 months earlier, had a 5 month old baby and were fed up of renting just because we kept having to move every 18 months or so due to bad landlords, crappy houses or people selling up. It was silly looking back but at least we got on the housing market rather than throwing money away each month renting

Leanne8t3

@matchboxful
Yes it was just life overspending. Nothing big or stupid, just having only 1 person working due to childcare and just everything building up. But lowering all our outgoing a now by £500 we should no longer build up debts.
Credit cards have been closed so we now just have 1 loan and a mortgage 614 loan, 100 to our friend and 800 mortgage.

Debtslayer

I've read this now a few times and I can't understand how you managed to rack up 22 k of debt just on house purchase fees etc.
surely you've been overspending each month as well, which you need to address as this may well continue evening you sell and move into a cheaper house.
To move you're going to have another load of fees, selling and buying fees, how are you proposing to pay these?
I think you need to post an SOA firstly and see where you're overspending and see if you can repay your debts without having to sell and move.

HappyMJ

Leanne8t3 wrote: »

We were new at it, £400 was the mortgage application fee, then solicitors etc oh and stamp duty, sorry I forgot that. We were desperate as we'd just moved 6 months earlier, had a 5 month old baby and were fed up of renting just because we kept having to move every 18 months or so due to bad landlords, crappy houses or people selling up. It was silly looking back but at least we got on the housing market rather than throwing money away each month renting

Nothing wrong with renting. I own a house that I let out and I also rent a flat that I live in. The payment you make in rent goes towards the interest on the mortgage on the house and compensates the landlord for the interest they would have got on the deposit they put down on the property. The rent also pays for all repairs and maintenance. I make next to nothing (about 5% of the rent is profit - £30 per month) on the property that I let out and the landlord of the flat I rent makes almost nothing as well. When looking for a property you need to find a professional landlord i.e one who never is going to sell and owns more than 10 properties and is in it as a business. Avoid the accidental landlord if you can. As a tenant you've got no variable costs. If the boiler breaks down you call the landlord and it gets fixed...for free. There's no early repayment penalty. If you want to leave you hand in your notice and move out in just one month. If you sell it could take many months to sell and you've got to pay agency fees to advertise and sell the property for you and you've got solicitor fees on sale to account for.

If you buy you really need to be in the property for a minimum of 10 years to make decent money. The value of £285k to £295k is the price it will be put on the market for. It probably won't achieve that. Will getting £250k affect your plans? It most probably will. What have you spent on the property to have it increase by so much in relation to other properties in the area? A passive 45% increase over the last 2.5 years is almost unheard of. Buyers will know what you paid 2.5 years ago and will base their decision to buy based on that and what you've spent improving the property.

matchboxfull

HappyMJ, whilst I agree with you that there are positives to renting, and I certainly think that our culture of home-ownership in this country is questionable, I do have to step in in the OP's defence: housing multiple children in rented accommodation can be extremely difficult.

Your suggestion to choose professional landlords is a really good one but I've certainly found that the larger house to require the more likely it is that that rental will be accidental (a divorce, inheritance etc.). The result is submitting to moving your children probably every couple of years at a minimum, which is...horrible frankly.

All that said, it's fairly clear from what you have said, Leanne, that you couldn't really afford to get on the ladder when you did. You managed it, though, so now you've got to try to protect it. Whether you downsize or not the most important thing is to be 100% honest and thorough with your monthly budget. If you post an SOA people on this board might be able to help you with that.

It doesn't matter what you have spent in the past. Draw a line under that. Move forward. Sounds like you have made a really good start with that already.

Leanne8t3

We got the property cheap as we were already living in it and the landlord didn't want to lose out on the 6 months left of our term and wanted a quick sale as he had cancer unfortunately and wanted rid before he became too ill to manage it. So we got it for 200 when it should have been around 210-215
We have spent 10k converting the garage and front extension which was a utility room, into a bedroom and knocking through from the inside. Decorating and keeping it in good condition. There is a 3 bed a few doors away for 279k - ours is 5 bed with a much bigger back garden and an extra reception room. So I'm not sure how much we would get, the valuation we had said to market it 295-300k with the expectation of 290k.
There is nothing wrong with renting, but when you've moved as many times as we have with 4 kids in tow it's a real pain. Trying to afford the deposit for a new house before you get yours back with very little notice and not being able to decorate, have our dog, be in the right area for schools etc is hard.
Long term I would love to buy a repo, do it up and release some equity to buy a bungalow / house to let out so that we have something for the kids future. But that is long term thinking

Leanne8t3

matchboxfull wrote: »

HappyMJ, whilst I agree with you that there are positives to renting, and I certainly think that our culture of home-ownership in this country is questionable, I do have to step in in the OP's defence: housing multiple children in rented accommodation can be extremely difficult.

Your suggestion to choose professional landlords is a really good one but I've certainly found that the larger house to require the more likely it is that that rental will be accidental (a divorce, inheritance etc.). The result is submitting to moving your children probably every couple of years at a minimum, which is...horrible frankly.

All that said, it's fairly clear from what you have said, Leanne, that you couldn't really afford to get on the ladder when you did. You managed it, though, so now you've got to try to protect it. Whether you downsize or not the most important thing is to be 100% honest and thorough with your monthly budget. If you post an SOA people on this board might be able to help you with that.

It doesn't matter what you have spent in the past. Draw a line under that. Move forward. Sounds like you have made a really good start with that already.

What's a soa? Sorry to sound stupid

HappyMJ

Leanne8t3 wrote: »

We got the property cheap as we were already living in it and the landlord didn't want to lose out on the 6 months left of our term and wanted a quick sale as he had cancer unfortunately and wanted rid before he became too ill to manage it. So we got it for 200 when it should have been around 210-215
We have spent 10k converting the garage and front extension which was a utility room, into a bedroom and knocking through from the inside. Decorating and keeping it in good condition. There is a 3 bed a few doors away for 279k - ours is 5 bed with a much bigger back garden and an extra reception room. So I'm not sure how much we would get, the valuation we had said to market it 295-300k with the expectation of 290k.
There is nothing wrong with renting, but when you've moved as many times as we have with 4 kids in tow it's a real pain. Trying to afford the deposit for a new house before you get yours back with very little notice and not being able to decorate, have our dog, be in the right area for schools etc is hard.
Long term I would love to buy a repo, do it up and release some equity to buy a bungalow / house to let out so that we have something for the kids future. But that is long term thinking

Was the £10k borrowed? And all the other costs you incurred in renovating the property? That would make much more sense as to the debt you're in. As you've figured out it's actually quite expensive owning a property. It isn't just the mortgage...it's everything else. A 5% discount was fair as your landlord would have saved on agency fees. Did you get multiple agencies in to put a value on your property? Was the lowest valuation £290k?

Leanne8t3

Yes the 10k was borrowed and makes up some of the 22k debts.
That was just 1 agency, I have another valuation this week

HappyMJ

Leanne8t3 wrote: »

Yes the 10k was borrowed and makes up some of the 22k debts.
That was just 1 agency, I have another valuation this week

Good. So we've got a property purchased at a 5% discount originally worth £210k adding on £10k of capital spend increasing the property worth to £225k with some HPI over the last 2.5 years should make it £250k. Still not sure if you'll get £290k but good luck. I wouldn't ever rely on the valuation given by one agent. They sometimes put a big price on your property to entice you to list your property with them even though they have no intention of helping you sell it. Having high priced properties on the board makes other overpriced properties look cheap and makes them easier to sell. You've always got to be realistic. What does Zoopla think it's worth? They won't know about the £10k capital spend so it should be around £15k under what it's really worth.