Sell up and have a clean slate?

RosieGlow74

Hi all,
I've been lurking here for a bit and unsure whether to post but what's the worst that could happen?!

I live with my partner and young daughter. We have a mortgage and unsecured debts totalling £167,000.

Our unsecured debts are £44,000 and we're currently in a DMP, but it's going to take until 2044 to clear it all!

We've looked at an IVA but there's one of our creditors who owns more than 25% of our debt that's not agreeing, apparently they never do.

This has been hanging over our heads now for 5 years and quite frankly we've just had enough.

Our house is worth around 180k so if we sold we'd get a clean slate back and certainly have learnt from this.

I'm worried that if we private rented we wouldn't pass the credit checks? We have looked into council housing and have been told that we'd be eligible, has anybody else done this or are we just mad?!

In my head one minute it's a yes and the next it's a no!

Just wanted to get an opinion from someone else who's been in the same boat.

Thanks!

enthusiasticsaver

If you sell up and are on a dmp there will be very little chance of you getting another mortgage in the next 6 years. How old are you?

Private rent is very often more expensive than a mortgage so in the long run it may not help you.

If your house is worth £180k the fees on moving would be around £4 - £5,000. If you got the asking price therefore you would get around £175,000 so only £8,000 more than your mortgage and debts combined and deposits on a new property etc may take up some of that particularly if you have to private rent and they ask for 6 months rent up front because of a poor credit history.

In a council house you will have to go where is available which may be in a horrible area a long way from your daughters school. You have no choice.

Personally I would not do it.

quintwins

I wouldn't sell my house, it's your little bit of security and like you said you could have issues renting and may end up having to pay bigger deposits for need guarantors. You might also be classed as making yourself homeless so you might struggle to get a council house at first.

Are you struggling month to month financially or is it just the stress of being in a dmp? if it's the former talk to your dmp and adjust your budgets/payments.

RosieGlow74

Hi,

I am 42, partner is 38.

We've got a mortgage and secured loan which total £907 a month, plus our DMP payment of £160 so a total of £1067.

We could rent a decent place for £700 so a big saving and no debts......but no house! :eek:

enthusiasticsaver

When is the mortgage and secured loan due to be repaid? If you are struggling you can get the DMP reduced.

You have to look on the mortgage and secured loan as an investment in an asset as well as putting a roof over your head. That is quite a hefty repayment for a £123,000 mortgage. What interest rates are you paying?

quintwins

RosieGlow74 wrote: »

Hi,

I am 42, partner is 38.

We've got a mortgage and secured loan which total £907 a month, plus our DMP payment of £160 so a total of £1067.

We could rent a decent place for £700 so a big saving and no debts......but no house! :eek:

If you do this you might never own a home again. realistically by the time you put your house on the market, sell your house, exchange,move, save a deposit and wait for your credit to improve your only option will be a shorter mortgage due to the fact you will be closer to retirement age (I'm not saying your old btw) which will have higher repayments.

If I were you I would completely ignore that dmp,it's not adding any interest and your not being harassed by creditors and really for what you owe £160 isn't much. Post a SOA and try pay off your secured loan early to free up some money instead.

National_Debtline

Hi RosieGlow74

Welcome to MSE. This is certainly a big decision you’re thinking about. What would your long term goal be? If you want to own a home again you may struggle given your age and the impact on of the debts on your credit file. Some lenders can be reluctant to give a mortgage to someone over 40, but this could depend on a number of factors, including the size of your deposit.

If you do sell the house one option could be to offer a full & final settlement on your unsecured debts , saving a bit more money for you to keep. But bear in mind at the moment, if your mortgage is affordable your home is not at risk. The debts in the DMP have limited powers.

I think it’s more likely the IVA is ruled out because you have more equity than you owe on your debts. Usually there is an equity clause in an IVA where you try to remortgage to release money to pay towards the debts, in your case that would clear them all. I’m not sure it’s fair to say a creditor has a blanket policy of refusing IVAs, even if that is in their best interest. I’d certainly advise you speak to one of the free debt advice agencies for more detailed advice. Good luck with it all.

Susie
@natdebtline

RosieGlow74

The problem is our secured loan, it's got a huge interest rate of 20% and it's got 6 years left. We overpay £25 a month at the moment. We can't remortgage because of the DMP. It's just hanging over us what with that and the DMP it's pay day to pay day every month.

enthusiasticsaver

Goodness 20% for a secured loan!!! That is horrendous. Please tell me that was not for debt consolidation.

zenshi

You could look into switching mortgage product with the same company whilst on DMP, many of us on here have done so.

quintwins

Are you both working? if not have you made sure you are claiming all you are entitled to for your daughter? and even if you are working you must be on low income so should still look into tax credits. I know £1000 is alot of money but you should still have enough left to get by if you truly don't you need to contact your dmp and discuss it with them.

Also is your dmp with a fee free company?