Should I Sell And Rent?

cloudnine_2

Hi ...I have a house worth £285K and an interest only mortgage for £245K with Northern Rock fixed at 6.9% for 15 years and then 3 years back to normal. So, an 18 year interest free mortgage. Now..I can't see me repaying £245 in 18 years, plus I'll be 70 then ! I'm wondering if I should sell up and rent. I have a £77K debt and this would mean I could release the £40K equity in the house towards repaying it.
I spoke to CCCS today and hopefully my creditors will agree to a DMP.

Any advice would be brilliant...thanks so much

turnbull

I'd say no. You'll have a lot of fees such as legal, moving and tax, plus you need a house. I really wouldn't bother with the hassle, plus if prices drop only 10% you'll probably end up losing money overall.

cloudnine_2

You're probably right. With £35K equity in my house, even if my creditors manage to stake a claim, its really only part of the overall £77K debt. In other words, once I've cleared the £77K, in theory they shouldn't have a crack at getting a share of the equity. It would be briiliant if I could release that £35K to pay off some of the £77K debt. However, Northern Rock won't allow that, They're aware no doubt that the value of the house will fall a little over the coming year. Thanks again

Tassotti

Confused

How on earth do you work out that you have an 18 year interest free mortgage!?!??!

Tass

cloudnine_2

I meant 15 years not 18...Crikey, that would be a first eh? Thanks

Tassotti

You really are on cloud nine if you think your mortgage is interest free (no matter the length)

Am I confused or what?

Tass

catw75

Speak to Payplan about a lump sum IVA.

Running_Horse

Can I get one of these 18 year interest free mortgages?

No wonder Northern Rock are in trouble.

Pez2

It depends on which direction you think that the housing market is going to go. If you can't pay off the £245K then you're going to have to sell eventually anyway, so you need to try and sell close to the peak of the market. If you think prices are going to fall then that means now. If you think they're going to keep on rising then you might want to hold on for longer.

It also depends on how much the difference is between your mortgage payments and local rent levels. If rents are a lot cheaper then, even if you lose some of your equity to fees, etc when you sell, you'd have more disposable income left over each month to meet your debt repayments.

pinkshoes

£245k on an interest only mortgage with no plans of a method to pay it off, AND a £77k debt... Doesn't really look good, and I would take it as a sign that you're perhaps not the most financially responsible person in the world...

Your interest must be costing you £1400 a month!!

If I were you, I'd sell the house, plough the equity into the debt, rent something much cheaper than you're paying in interest, then tackle the rest of the dept hopefully before you reach retirement!!

Could you rent the house out for much more than £1400 a month?!?!