Difficult situation

dks

Ok here goes

I own a house worth around 150-160k,with a mortgage of 100k, The 150k is quite accurate I think.

I am on a joint DMP with my husband, approx 5 years left. Both of our credit ratings are ruined, lots of defaults (all in 2014 though), obviously late payments.

Never missed a mortgage payment or been late with it though, and had a mortgage since 2009.

For various reasons we are desperate to move, we pretty much need to (neighbour issues)

My husband wants to sell up and move into rented. Rent would be double what we pay on our mortgage now but we would get help with it due to income. Failing that, he wants to buy another house with a sub-prime mortgage if possible which I think is near enough impossible.

Is it a bad decision to sell up? We are unlikely to get back on the housing ladder for a good 5 years (allowing for credit ratings to be repaired and to save more money) if at all!

I have a friend ready to rent our house which would cover the mortgage payments, thus we keep ownership but move into our own rented.

We would never want to move back in but I feel like we should keep it as an option incase we're ever desperate. Plus we might be able to sell it for a higher price in a few years and then have a larger deposit for a new house.

Hubby can't understand why we don't just sell up, pay off the debt, move into rented and then buy in another 5-6 years.

I worry that rented isn't stable (we have a 7 year old and a baby), and the worry of being thrown out or having to keep moving worries me a lot. Plus would it feel like home? Even if we could decorate, I'd feel like "what's the point" because we're wasting our money and time on a house that isn't ours. Plus we might only be there a year.

I'm not sure what the most sensible decision is, any advice?

Mojisola

dks wrote: »

For various reasons we are desperate to move, we pretty much need to (neighbour issues)

I have a friend ready to rent our house which would cover the mortgage payments

If you're having to move because of the neighbours, how long will your friend be able to stick it out?

How will you cope if you have to cover the mortgage and find rent?

glasgowdan

You'll still have to deal with the neighbour if you rent the house out. I'd sell.

Arleen

Sorry to hear about your hardships!

Selling indeed seems like a smart thing to do, as it will free up funds and allow you to recover quicker. Your main worry appears to be that renting is throwing the money away. It's a common misconception in the modern ownership-crazy world, and many people think the same way.

And while you know the benefits of home ownership, let me tempt you with some of the advantages of renting, and why it's not wasting money.
Renting is cheaper monthly than a mortgage. While there are exceptions of this, for example, you were in perfect time and place when buying a house, it generally will cost you less to rent.
The difference saved can be put into further work, first in your case helping to repay the debts faster and then to be invested into, for example, mutual funds. And that will bring your respectable profit over the years, in a similar way that house will.
Additionally, if you fall back on your rent, worst case you have to downsize to a different place and that is it. When you fall back on your mortgage at any point, this can get a lot worse.

As for not feeling like at home - I must say that I disagree. I rented my whole life, decorated most of the places and worked with landlords to make them feel to my taste. And many landlords will be happy to rent for many many years to the same person, as long as they are good tenants.

So do not worry much about it, renting is not as bad as it may seem, and just think how much the money from the sale could help you recover.

Mojisola

dks wrote: »

For various reasons we are desperate to move, we pretty much need to (neighbour issues)

When you sell, you’ll have to fill out a Seller’s Property Information Form. This requires you to highlight any previous or current disputes with neighbouring properties or whether you know of any issues that could lead to a dispute.

That information could either put them off the sale or lead to a reduced price being offered.

[Deleted User]

dks wrote: »

Ok here goes

I own a house worth around 150-160k,with a mortgage of 100k, The 150k is quite accurate I think.

.... Rent would be double what we pay on our mortgage now but we would get help with it due to income. .....

Are you sure that you would get help with 50k in the bank, plus rental income?

Shakin_Steve

Sleazy wrote: »

Are you sure that you would get help with 50k in the bank, plus rental income?

That's £50K in the bank or rental income. Can't rent and sell. I agree that there'd be no help though.

AnotherJoe

Arleen wrote: »

Sorry to hear about your hardships!

Selling indeed seems like a smart thing to do, as it will free up funds and allow you to recover quicker. Your main worry appears to be that renting is throwing the money away. It's a common misconception in the modern ownership-crazy world, and many people think the same way.

And while you know the benefits of home ownership, let me tempt you with some of the advantages of renting, and why it's not wasting money.
Renting is cheaper monthly than a mortgage.

Eh? How do landlords make money in that case ???????
Why is it so many posters here wish to buy because their mortgage will be lower than their rent?

Arleen

AnotherJoe wrote: »

Eh? How do landlords make money in that case ???????
Why is it so many posters here wish to buy because their mortgage will be lower than their rent?

Because Most people compare different types of properties, in various standards and with the different plans in mind when they come to that number. Or have some outstanding offer on the house, but that is generally speaking rare.
For example, when buying a house, you may accept for it to be in lower standard when you buy, than you would expect from a rental place. Because what you invest into renovating a house that you own will increase its value. While putting it into someone else's house is, well, increasing that persons value.

It's also worth remembering that cost of ownership does not end with a mortgage, and all the repairs that typically are covered within your rent now have to come out of your pocket.

But sure enough with long enough game buying beats just renting, because with 10+ years houses go up in value, and so does potential rental income from them. But at the same token, the saving that comes from renting can be invested, and unlike investment in the house quickly withdrawn if needed.

robotrobo

Mojisola wrote: »

When you sell, you’ll have to fill out a Seller’s Property Information Form. This requires you to highlight any previous or current disputes with neighbouring properties or whether you know of any issues that could lead to a dispute.

That information could either put them off the sale or lead to a reduced price being offered.

Why admit that, especially if theres no police involved and nothing on paper,

Cakeguts

Enter the house into an auction. Get rid of it and the neighbours. Rent for a few years until your children leave home and then buy another house when you don't need a family sized house anymore?