Should we sell our flat to become debt free?

another_casualty

It’s a decision that needs thoroughly looking into , not just money but in terms of the jobs you do. Do they pay well? Are they jobs that can easily be obtained if you did move to another area?

The good thing is you have equity. The bad thing is that you are in an interest only mortgage . If it was not an interest only mortgage , I would have suggested going on a d m p , not I v a . Only my opinions course. What area do you live in now? Where would you like to move to if push comes to shove ? What age bracket are you in ?
Just some of the many questions that have to be answered to help you decide what is to the best .
Probably best to do an s o a in the meantime ..

Wishing you the best

debtaghh

I did exactly this and we completely regret it but we didn't clear all our debts . We are now stuck in rented accommodation and the landlord has given us our notice. Ppl told me at the time to not come off the property ladder but we didn't listen. It's a lot harder to get a mortgage now. From personal experience I would advise you to try and find another way of clearing your debt, extra job, cutting back, Iva etc. Good luck either way.

Windofchange

This came up in another thread not long ago. I'd give the same advice. Sell. Assuming you get your asking price then that gives you enough to clear your debts and start again. You're going to lose the house anyway in 11 years time as you have no repayment plan? Is it worth 11 years of stress trying to keep something that you'll only lose anyway? Only argument for that would be if you think that prices in your area will rise stratospherically in the next decade, which given what has gone on for the past 20 years I think highly unlikely.

As others have said, putting up an SOA is a good start. I'm assuming that to service nearly two grand a month of debt repayments, you and your partner are earning good money? You should comfortably be able to afford the rent on a 3 bed house or similar, and I would say there is no substitute for happiness which it would appear is in short supply at present. Only problem i see with selling up is are you just going to do the same thing again? Would having no debt in your life just mean you think ah well I can put this on the credit card, get that on a loan and back you go again? Taking this way out isn't going to solve what appears to be a very poor relationship with money with everything from the mortgage to daily expenses kicked down the road to be dealt with at some arbitrary point in the future.

Molillie

I have no advice on which route you should take, but I'd really weigh up the probability of frequent moves if you rent, unless the area you live in is better than most in this regard. This can be very disruptive for everyone in the family. There is also the possibility that you'd build up more debt, as your children get older, it's very easy to spend enormous amounts on them.
Have you looked into renting out your place, and renting yourselves? I don't know how feasible this is, but it's something my neighbours did when baby number three arrived, and they have had the same tenants since. (they rented to colleagues)
I find some of the threads on mortgage free wannabe are excellent, both for maximising income, by things like mystery shopping, etc. (info on various boards here) and for their planning. I also watch a lot of Youtube for ideas on organising and decluttering, which can help space work better.
I do think that you need to sit down and work out the financial implications of each choice, adding in the cost of frequent moves and rent increases if you do sell up. You seem to have a reasonable amount coming in, have you analysed how you fell into the debt? Would it happen again? Best of luck with what you decide.

enthusiasticsaver

Normally I would say no it is never wise to use your assets to clear unsecured debt however in your case it may have to be something to consider. Having so much debt and an interest only mortgage and a totally inappropriate house for your family are the disadvantages for continuing as you are.

Bear in mind though a poor credit history may mean it is difficult to get another mortgage in the future so as others have said are you willing to rent for the rest of your lives? The older you get the more difficult it is to get another mortgage as the mortgage will have to run over a shorter term..

How easy will it be to stick to a budget (presumably there is a reason why you are so heavily in debt? Usually it is overspending but it could also be changed circumstances)

Saving a deposit whilst paying rent won't be easy.

I would suggest an soa as a first step.

beanielou

Sell. At the end of the day if you are IE you are in effect renting.
What have you spent the money on?
Going forward can you stay within your income?

spongebob1913

worrying that people are saying that you are effectively renting, or that it isn't really an asset, when clearly the flats appreciation alone proves both of those wrong, in that you can now clear your astronomical debt from selling it.


Sadly, I am not too keen to pass judgement on the situation as there are too many variables - Selling would/should be last resort.


We would need to know what your salaries are, how the debt is spread, what your monthly outgoings (other than debt) are etc.


£70k is a lot, but with some hard-core budgeting and living well within our means, I expect you could chip away at it healthily, but a huge mental adjustment would be needed to never get into this situation again.

Craigie001

Selling up to clear debts would be a massive thing especially with the cost of renting these days.

I would recommend doing a financial check with incomings and outgoings and speaking to your creditors. Ive been in a pickle before with my finances and i spoke the credit card companies who reduced the rate to 1% for me, this allowed me a little breathing space. I managed to get a loan to cover my credit card debts and the outgoings for the loan is a lot less than what I was paying towards the cards, I'm planning to clear the loan as soon as I can with a 2nd job.

Would be worth speaking to debt management or financial advisor I reckon, I personally wouldnt sell up to rent as there are definitely better options available for you.

Good luck

spongebob1913

Smiley, I've just seen on another post your parents could help - why why why are you not looking at this? yes, it may be embarrassing, yes you may feel ashamed, but ultimately it will cost you so much less in the long run. You said they've helped you in the past with a similar loan that you paid back, and you're worried the cycle will continue. Getting an IVA or whatever you have mentioned previously will clearly be a slight getout for a much bigger problem; which is your spending. If its happened twice, there clearly needs to be some serious budgeting. I understand it's hard with children and a relatively low income, but living within your means is the real test here, once you achieve that mentality things will get better. Selling some other possessions of relative value, changing shopping habits, setting hard budget limits etc seems a better idea to me. I'm not sure with an IVA, or selling the flat you will truly learn the value of living within your means. If your means are not enough - perhaps look at extra work if possible?