Sell Up and start fresh???

anon1982

Ok so I have a fair amount of debt and lately not seen a way out. I manage to pay my loans and credit cards monthly not a problem, however it leaves us little to nothing in the way of savings. So if anything happens we tend to struggle and use my credit card to get by .

Recently my mental health has suffered with the constant thought of clearing this debt. I know in 3-4 years we will be loan free then start to clear the credit cards. but i just cant wait that long living on bare minimum and not saving for the future.

So after discussions with my wife we discussed the possibility of selling our home and clearing all our debt.

We are in a mortgage contract till Jan 2020 so effectively a year to get the house ready to sell.

If we do sell the house for the market value in our area we will would clear all debt and effectively debt free by mid 2020 depending on how quickly we sell the house or if we do.

The thought of possibly been debt free in 2 years rather than 4+ is really appealing and was wondering if there are any others on here that have thought along these lines, or anyone that has done this and is now on the other side and not looking back.....

any advice or input would be appreciated.

PasturesNew

It might cost you £15k to move, with all the fees, costs and stuff.

If you're selling a £1million house, to pay cash for a £900k house and settle £100k of debts .... it's probably worth it.

If you're selling a £90k house, to move to a £75k house and clear £15k of debts it's not worth it.

anon1982

I see what you're saying.

However i am in a well paid job but not taking advantage of my income due to all my outgoings.

The plan is to sell the house and clear all debt. Then move into a rented property for a couple of years. With only rent and household bills to pay we could have potential savings of £10k+ a year.

The debt we pay every month is ridiculous and once cleared saving for a deposit on a new property wont take long at all. But on the other side its our home and we love it.

Just a thought atm

Niv

Without knowing the numbers involved it is hard to say so I would suggest you post a SOA so others can help.


Selling comes with a cost, renting comes with a cost. If you have bad credit you may well find it hard to get another mortgage when you are ready (although it sounds like you are coping and not defaulting so you may be ok there).

Unicorn_cottage

As Pastures New says it is kind of hard to comment without knowing the figures involved for the debt, income and property price. Also where you are located will have a large bearing on this. If you would be happy to fill out a Statement of Affairs that would help people advise and may help focus your efforts if you haven't already done so. http://www.stoozing.com/calculator/soa.php

Also you seem to be after a quick fix but are you using all the options available to you to reduce your debts as quickly as possible, i.e. cutting back on expenditure, brining in additional income, snowballing debts and transferring balances to 0% credit cards etc?

anon1982

Thanks for the feedback.

I just think in my mind and how i feel I'm at the stage where i want rid of all debt because its starting to consume our life. I guess it is a quick fix. But i cant continue worrying about it for the next 4 years

I'll fill in a SOA and go from there.

Thanks

ReadingTim

anon1982 wrote: »

I see what you're saying.

However i am in a well paid job but not taking advantage of my income due to all my outgoings.

The plan is to sell the house and clear all debt. Then move into a rented property for a couple of years. With only rent and household bills to pay we could have potential savings of £10k+ a year.

This doesn't make sense. Unless your mortgage and utility bills are absolutely massive, and you're planning to move into somewhere significantly smaller and cheaper to run, your new bills and rent aren't going to be that much smaller than current bills and mortgage.

So, if you think you can save £10K+ p/a then, there's no reason why you can't save it now - or rather use it for debt repayment.

Also, you can only play this card once. So unless you work out what caused the debt in the first place and address that, you risk the problem repeating itself a few years down the line, but no house to sell to bail you out!

Herzlos

If you've got enough equity in the house then you'd be able to get a cash lump to clear the debt, but then you'd likely be paying more in rent than the mortgage and have a struggle to get into a position to buy, and then you'd spend a fortune in the act of selling and buying and moving twice. It could easily cost you £10k in fees/costs to sell and move, and it's not much cheaper to buy.



If you're in a position where you've got enough equity to do that, it might be better off (in this specific instance, it's otherwise pretty dangerous) to remortgage for a much larger amount and then you can transfer your debt from high interest non-secure debt to low interest secured debt. If you then can't keep up you'll lose the house, but you're thinking of selling the house anyway.


Depending on the debt level, you'd likely be much better off selling as much stuff as you can live without; cars, phones, laptops, cameras, DVD's, furniture and so on. The last thing you want to do is sell the house to rent.

anon1982

How doesnt it make sense? All my money after living costs goes to debt repayment.

So for example:
I sell my house and with the equity clear all my deby, loans and credit cards the lot.

I rent a property with rent and utility bills of the same cost as my previous mortgage etc

The money I use to pay towards debt is no longer an outgoing its cleared through the sale of my house.

so say i have a loan and my wife has a loan those two monthly payments top £900 a month theres a £9k+ saving.

we also have credit cards on top of that prob come to £500 say.

When the equity clears the cards and loans theres £1400 that we are no longer paying out of or pocket which becomes cash to save.

So have £1k a month put away and an extra £400 to enjoy life a little.

anon1982

Herzlos wrote: »

If you've got enough equity in the house then you'd be able to get a cash lump to clear the debt, but then you'd likely be paying more in rent than the mortgage and have a struggle to get into a position to buy, and then you'd spend a fortune in the act of selling and buying and moving twice. It could easily cost you £10k in fees/costs to sell and move, and it's not much cheaper to buy.



If you're in a position where you've got enough equity to do that, it might be better off (in this specific instance, it's otherwise pretty dangerous) to remortgage for a much larger amount and then you can transfer your debt from high interest non-secure debt to low interest secured debt. If you then can't keep up you'll lose the house, but you're thinking of selling the house anyway.


Depending on the debt level, you'd likely be much better off selling as much stuff as you can live without; cars, phones, laptops, cameras, DVD's, furniture and so on. The last thing you want to do is sell the house to rent.

We have tried to remortgage in the past and borrow some equity to pay it off, but the bank refused because the computer said no!!!!

I am a Ltd company as well which they didnt like. Although my monthly bills are always paid and we've never missed a payment. Also we have sufficient equity in the house to clear all debt they still wont help us.

Even to the point where we have sat with them and said if you lend us this on our mortgage this will free up £kkk a month. It will pay X Y & Z and It was if they couldn't see the end goal.....

ReadingTim

anon1982 wrote: »

How doesnt it make sense? All my money after living costs goes to debt repayment.

So for example:
I sell my house and with the equity clear all my deby, loans and credit cards the lot.

I rent a property with rent and utility bills of the same cost as my previous mortgage etc

The money I use to pay towards debt is no longer an outgoing its cleared through the sale of my house.

so say i have a loan and my wife has a loan those two monthly payments top £900 a month theres a £9k+ saving.

we also have credit cards on top of that prob come to £500 say.

When the equity clears the cards and loans theres £1400 that we are no longer paying out of or pocket which becomes cash to save.

So have £1k a month put away and an extra £400 to enjoy life a little.

It doesn't make sense because as well as no debt, you will also have no house. For how many months are you going to have to put away £1k to replace the house you sold? - considerably more than had you simply concentrated on repaying the debt I suspect...