Sell house to pay debt advice

Windofchange

Is there anyway that you could take on extra hours at work / get another job? You could then try to pay off the smaller card debts first so that it gives you a sense of achievement. The MBNA, American Express and House of Fraser debts would be clearable pretty quickly if you could increase your monthly income by £500 or so? This then sets you in the right mentality to start making dents into the bigger debts. I did this when I was paying down the cards I had - clear the low hanging fruit first so that it gives you a feeling of sorting yourself out.

It then depends on how much of a slog you want to go through. As per the above, if your plan is that you are going to have to sell the house anyway to repay the capital, then you both need to come to a decision as to whether it is worth the stress of keeping all the plates spinning for another few years. It might be worth it to you to give stability to your children (not having to move schools etc), or because you like the area, or whatever. That is something only you can decide as a family.

Looking at your SOA, short of cancelling the phone line there isn't anything too obvious that is going to result in huge savings to address the debts with.

fatbelly

With that soa I'd go for a debt management plan.

Is your mortgage on a repayment basis?

edit: just noticed it isn't. It should be. That will extend your dmp a bit but makes that strategy a better option.

Paulapips

fatbelly wrote: »

With that soa I'd go for a debt management plan.

Is your mortgage on a repayment basis?

edit: just noticed it isn't. It should be. That will extend your dmp a bit but makes that strategy a better option.

That's all we could get at the time, it was a 95% interest only and never been in a position to change to repayment, we have been trying for the past three months to remortgage but everyone says no sadly x

Paulapips

Windofchange wrote: »

Is there anyway that you could take on extra hours at work / get another job? You could then try to pay off the smaller card debts first so that it gives you a sense of achievement. The MBNA, American Express and House of Fraser debts would be clearable pretty quickly if you could increase your monthly income by £500 or so? This then sets you in the right mentality to start making dents into the bigger debts. I did this when I was paying down the cards I had - clear the low hanging fruit first so that it gives you a feeling of sorting yourself out.

It then depends on how much of a slog you want to go through. As per the above, if your plan is that you are going to have to sell the house anyway to repay the capital, then you both need to come to a decision as to whether it is worth the stress of keeping all the plates spinning for another few years. It might be worth it to you to give stability to your children (not having to move schools etc), or because you like the area, or whatever. That is something only you can decide as a family.

Looking at your SOA, short of cancelling the phone line there isn't anything too obvious that is going to result in huge savings to address the debts with.

We are, I was a housewife for ten years but started work last February then changed jobs in July, it's a job I adore, my basic is 390 a mo th however I've always done overtime and can expect at least £600 this month from xmas overtime, my husband literally works all week then every other weekend, he would work every weekend if the law allowed, he worked every day over xmas so I'm hoping for a boost this month when payday comes, I'm hoping it'll least pay off the overdraft, might give us some breathing space,

Windofchange

Paulapips wrote: »

We are, I was a housewife for ten years but started work last February then changed jobs in July, it's a job I adore, my basic is 390 a mo th however I've always done overtime and can expect at least £600 this month from xmas overtime, my husband literally works all week then every other weekend, he would work every weekend if the law allowed, he worked every day over xmas so I'm hoping for a boost this month when payday comes, I'm hoping it'll least pay off the overdraft, might give us some breathing space,

I would start by trying to attack the most expensive debts first. If that is the overdraft then fine. I found it is a mindset change. Once I got out of spending mode and owned up to what I owed, it came down quite quickly. I wasn't as deep into debt as you are, but it was certainly substantial. There are many stories on here about people repaying way in excess of what you have - think there is a post pinned from someone who was 100 and something grand into trouble.

I think the answer to your question will be a personal choice. Is the house worth the stress to you? If I were looking at this purely from a business perspective, I would sell up, pay off my debts and start again. There are perhaps deeper thoughts at play here however. Maybe you can setup a DMP as suggested, but it seems to me that you will be loosing the house at some point in life anyway, so it isn't the same as if you had a repayment mortgage and you stood to actually keep the thing.

Whatever you choose I wish you luck - not sure how much this has all helped!?

DCFC79

£5k for a new boiler jeez, my mum didnt spend half of that for a new boiler inc the work the sparky had to do.

Paulapips

Wow she was lucky then, this was one of the cheapest quote I had too, we had to have the tank removed as we went on a combi boiler, and the work that was involved was immense. And we had to have the radiators cleaned, was cheaper that having them replaced.
Our old boiler had broken monthly for about a year and then broke so bad it couldn't be fixed without a Huge payout.

fatbelly

Paulapips wrote: »

That's all we could get at the time, it was a 95% interest only and never been in a position to change to repayment, we have been trying for the past three months to remortgage but everyone says no sadly x

I thought the lender had a responsibility to ensure there was some sort of repayment plan. Some people do use their pension pot to pay off the mortgage, then do equity release if they need funds in retirement, which I guess is a plan.

In your case what I had in mind is a switch to repayment with your existing lender, and use your decreased surplus on a debt management plan. That seems less damaging long-term than selling and moving to private sector rented accommodation.

Sunkencosts

Which part of the south will you be moving to? (she asked nosily), it's so much more expensive generally in the South East that it might be difficult to buy again even with no debt.

If there's no option to switch to repayment and no vehicle to pay off the outstanding mortgage at the end of the term, then I think I'd be inclined to sell up and start again. You have a good income coming in and could probably get another house deposit together within a reasonably short time?

However, if you can switch to repayment, or are expecting an inheritance between now and the end of the term to help with that then I'd be inclined to hang on and do a DMP. Owning your own home is a real security.

(Note: feel free to ignore, as this is just an opinion from someone in a similar level of debt!)

Happier_Me

In your situation I would do whatever it takes to protect your equity, if you sell up now and pay off your debts, you may never own a property again. Selling up is an extreme solution but also one that means you don't have to go through the pain of fixing the debt problem by changing your lifestyle longterm to pay it back. Once the debts have gone and you're sat in rented accommodation what's going to stop you from spending again with all that spare money you have each month and building up another debt.

So, look into moving to a repayment mortgage and the monthly cost (this will see your equity grow not disappear, ready to fund your move down south). Then contact Stepchange with a view to going on a DMP, presumably you are paying loads in interest and once this stops you will see the debt fall quickly. I think you will be much less likely to overspend in the future if you tackle the result of your previous overspend head-on.

A DMP will destroy your credit rating and that will affect your ability to get credit for a good few years though. But it sounds like a move is a few years away anyway so I would be looking to default on the debt asap. I'm not the best person to suggest ways to do this though:o