Should I sell my house to pay off my debts?

another_casualty

Howdy !
I can talk of some experience here. First of all : Zoopla overprice the market , so imho your place sounds like it would be worth £365-385k
That is without the repairs etc . New kitchen ? Not cheap.
Then of course, brexit has slowed down the market a lot . Not much is moving imho .

Regarding the equity in your home : The term Affordability is used more these days. That means it is unlikely that you would be able to borrow more on your home . Besides that , you would be eating into the equity which is not really the way to go . You have a second mortgage on your home also . This means in real terms you have mortgage of £305,000approx ? Btw, consolidation is rarely a good thing .
As others have said , it is best that you both list your soa and you will get the best advice .
I would think though that the interest only mortgage should change to a repayment , when you can afford to do so if you decide to stay
It would seem that you are probably better off paying the debt off in 5 years which isn't too long in the scheme of things .
If you moved ( considering you have a family ) , would it be in a desireable place like where you are now? So many things to consider

Hope this helps

enthusiasticsaver

If you have a poor credit record and are 47 the chances of getting a good mortgage rate are low so no I would not sell up. The fact that you are older means that there is a time limit on how long lenders will give you to repay the mortgage. Most will only lend up to 70 and that is only if you have a good pension. As your income will undoubtedly reduce in retirement I would not have thought it would be a good thing to go into retirement with a mortgage but some have to. Repaying a mortgage of that size though over a term of no more than 23 years will make the payments unaffordable.

I would make a plan to get that credit card debt cleared first. On a joint income of £98k that should be relatively easy but it is best to put an soa up as others have suggested. I would also say it is fairly critical to start thinking how you intend to clear that interest only mortgage. The equity you have is presumably not enough to buy you something even if you downsize so you would need another mortgage which will not be easy with a poor credit history and high debts.

Please bear in mind though that there is no guarantee that house prices will continue to rise.

getmore4less

The costs of moving will be more that costs on the debt.

Either way it is sunk costs.

You have options to reduce the cost of the debt but need to up the payments.

You need to work out where £5k a month is going
Once the debt has gone there is an interest only mortgage to deal with so whatever you free up now will be needed.


What rate is the mortgage and what are you paying what is full term of both bits.

PasturesNew

It's not worth it, for so little money, when you earn so much.

You'd regret it for the rest of your life.

Owain_Moneysaver

nicmogs wrote: »

eldest hopefully going to uni in sept,

Does that give you a spare room you could rent during term-time - which could give you nearly £4k a year under the Rent A Room Scheme tax-free to pay towards your debts or other expenses

WannabeFree

Do you have a plan to pay off the £280k mortgage if it's on interest only currently?

You need to do a SOA really.

macman

As above. How long have you got left on the mortgage and how will you repay it unless you downsize to a studio flat, given the limited equity you have?
As others have said, with gross income of £8K a month, where is it all going if you are only paying off £600 per month?

BabyStepper

Does your 'budget and arrangements wih creditors' mean you are on a DMP? It sounded a bit like that, otherwise surely the 'arrangement' is the same as for all of us, you make minimum payments, they add interest or not, and then you try to over pay the debt, no?

An interest only mortgage is not unlike paying rent but worse - the house will never belong to you but you have to maintain it and do repairs. What was your thinking around that? Long term and thinking about retirement, IO is not really a plan.

Does your £35k of debt include the £25k second mortgage on your home? If not, you are actually in £60k of debt.

I'm sorry to say but your story does not make sense. £95k of income with no attempt to pay off your mortgage or pay off debt, and wondering about selling your house to do it? As though you are in an emergency? This just does not hang together.

Where is all your money going? You said you have a budget, what does your budget tell you about that?

Do not buy a kitchen or make anyore big spends until you have a plan that looks lile it would work.

getmore4less

I'm scared we won't get another mortgage and I don't want to rent for longer periods as the house we are in now does continue to go up in price every year giving us more equity,

Picking up on this point.

If we look at your basic numbers

47 2 kids

Income £98k net will be between £5,400 and £6k depending on mix and other deductions, if I include teachers pension then the ranges changes to £4,800,£5,500

lets say £5k net nice round number.

Mortgage
£280k interest only and £25k lets guess those at 15y terms and 3%
Then £35k debt at say 10% you say over 5years lets say 6.
you also mention a recent car debt is that included.

£280k 3% £700pm ( I/O)
£25k 3% £172pm (15Y)
£35k 10% £650pm (6y)

£340k £1522pm

Sell up at £380 you have £40k less expenses say £30k(generous).

Any new mortgage is repayment and at 47 your longest term is going to be around 22 years at 3% £1522 will get you £290k.

You can buy at £310k range still spending the same money and will have to work support the mortgage till 70. use up your pension lump sums and thrown £10k away on expenses

There has got to be a better plan.

I think you may just not know where all you money is going and with decent incomes it is very easy to just use it all up and more but that is the past

what you need is a clear picture of everything before making any big decisions, selling up is pretty much irreversible and I think there will be better options.

I suspect you may need help looking at the big picture as your thoughts are sell up and start again.
This rarely works because the root causes of the problem have not been addressed.

With a SOA you can have a good look at whats going on.
http://www.stoozing.com/calculator/soa.php

Start with the debts
Your mortgage rates should be less than that what are?
what are all your debts rates and min payments(include any to family)

See how close my £1500pm guess was

Then go through all you spending for 2018 and use that to fill in the spending part of the SOA you can guess items to start with if not sure.

if the debt and net are about right there is £3,500pm to find or £42k per year

Once you have the SOA it would really help to have others look over it to see what options there are going forward.

I would be aiming for an initial one year plan to tidy up and eliminate any wasted spending to see what the options are with the money that gets freed up them look at a 10year plan to see what can be done about the mortgage

eg(pure guess work as an example but should be possible)

If we can find £1kpm(ish) for the debts and sort out any high rates debt free in 3 years could be a decent target

Get the mortgage rate as good as we can then after the debt has gone using the same money to target the mortgage you can half that £280k before you are 60.

on top of this I would be looking at you pension projections both lump sum and income, with these you can plan beyond 60.

If the incomes are high enough they may support a mortgage, the lump sums and downsizing will give other options.

For now selling up is the last resort if nothing else will work.

enthusiasticsaver

BabyStepper wrote: »

Does your £35k of debt include the £25k second mortgage on your home? If not, you are actually in £60k of debt.

I'm sorry to say but your story does not make sense. £95k of income with no attempt to pay off your mortgage or pay off debt, and wondering about selling your house to do it? As though you are in an emergency? This just does not hang together.

Where is all your money going? You said you have a budget, what does your budget tell you about that?

Do not buy a kitchen or make anyore big spends until you have a plan that looks lile it would work.

The OP has a £280k mortgage and a £25k second mortgage so that is a total mortgage of £305k. They have debt of £35k on loans/credit cards so overall £340k of debt.

I agree something does not add up if they have that income and have not been able to make repayments to either the debt or the mortgage.