need to downsize - rent or buy?

emma_and_her_brood

We've been struggling to meet our large mortgage and our fixed rate is about to come to an end. There is no way we'll be able to make ends meet then even if we make drastic cutbacks so we're going to have sell our lovely family home and downsize.
Everything in our price range is small and less than ideal, though we should be able to squeeze in to something. I was wondering though if it would be better to use the money from our house sale to pay of some debts, put the rest in some savings account then rent for a couple of years. That would give us time/breathing space to find something small but perfect. Also, with the muttering about house prices, we wondered if it would be good to get out while prices were high. Our house is worth £65,000 more than when we bought it 3 years ago, but I don't know if its going to remain that way.
So, finacial gurus, in the current climate, is it better to downsize or rent for a while?

Thanks for reading!
Em

pinkshoes

Selling and moving into rented accomodation sounds like a sensible idea at the moment, as there's no point buying something if it's not what you want.

If you're in rented accomodation, it'll put you in a better position when it comes to buying again, and that way you can look for the perfect (affordable) property, AND pay off all your debts.

Market seems pretty slow at the moment though (tightening of lending, and coming up to christmas...), so make sure you have enough to pay the mortgage for the time being.

emma_and_her_brood

Thanks for that!
It seems to make sense to me, but I'm no expert on these matters (obviously - or we wouldn't be in this position). I just want to check we're not making a huge mistake!
Em

PasturesNew

It would be best, in my opinion, to sell, settle your debts and rent.

Finding another house to buy - and forking out all the costs of selling/buying/moving might just put you back to square 1 but in a house you didn't really like.

Sell, pay off your debts, bank the spare cash, rent the cheapest place you can and squirrel away as much as you can over the following year (or 2-3).

Prices won't be racing away from you.

merlinthehappypig

I'd go along with everything said so far as well. That's what we have done and I haven't regretted it at all (not yet, anyway!)