Should I sell house to start again?

Annie161

Hello,
I have been having problems with debt for some years now. Mainly not earning what I thought I would earn, spending on credit cards for holidays or essentials as not able to stick to anything for long enough. Lots of issues that are mainly my fault. I have been a single parent for last 15 years and overcompensated which was stupid and foolish and I am quite aware of my shortcomings. My question is I have been thinking of moving to a cheaper house and buying something that would then have a small mortgage and to also clear my debts. I have never really loved the house i live in but I feel safe here and have also got some friends, am a short walk to a town and have clients here ( I am self employed health care worker). I have an interest only mortgage ( again thought I would be ok 15 years down the line) which has 11 years left at £140k. 
I do not have savings or an endowment in place to pay this off so I know 11 years down the line I will be forced to move.
I have attached my SOA to the best with the correct details. The £300 I have extra is from my son who is back from uni till sept so not sure if I should have included this as it goes further into debt I know.

Somebody that knows me well has said that they feel I will sit back and accrue debt again instead of trying to earn more money. This again is tricky as I have fibromyalgia and other health problems at the moment which stop me from doing as much work as I would like. I have done too much some days and have lost my weekend feeling unwell and unable to do the things I should around the house etc so I am in a bit of a muddle what to do for the best. Any advice please would be appreciated?? Thank you 

Household Information[/b]

Number of adults in household........... 1

Number of children in household.........  0

Number of cars owned....................  1[b]

Monthly Income Details[/b]

Monthly income after tax................ 1600

Partners monthly income after tax....... 0

Benefits................................ 0

Other income............................ 300[b]

Total monthly income.................... 1900[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 244.3

Secured/HP loan repayments.............. 0

Rent.................................... 0

Management charge (leasehold property).. 0

Council tax............................. 126

Electricity............................. 30

Gas..................................... 30

Oil..................................... 0

Water rates............................. 25

Telephone (land line)................... 15

Mobile phone............................ 17.5

TV Licence.............................. 13

Satellite/Cable TV...................... 18

Internet Services....................... 0

Groceries etc. ......................... 200

Clothing................................ 50

Petrol/diesel........................... 100

Road tax................................ 2.5

Car Insurance........................... 28.33

Car maintenance (including MOT)......... 20

Car parking............................. 0

Other travel............................ 0

Childcare/nursery....................... 0

Other child related expenses............ 0

Medical (prescriptions, dentist etc).... 10.4

Pet insurance/vet bills................. 0

Buildings insurance..................... 27.97

Contents insurance...................... 0

Life assurance ......................... 23.56

Other insurance......................... 0

Presents (birthday, christmas etc)...... 10

Haircuts................................ 0

Entertainment........................... 50

Holiday................................. 0

Emergency fund.......................... 0

NE Savings.............................. 20

Blue Rewards............................ 4

Accountant.............................. 25

HCPC Reg................................ 6.66

Work Insurance.......................... 58.66[b]

Total monthly expenses.................. 1155.88[/b]

[b]

Assets[/b]

Cash.................................... 1100

House value (Gross)..................... 310000

Shares and bonds........................ 0

Car(s).................................. 2000

Other assets............................ 500[b]

Total Assets............................ 313600[/b]

[b]

Secured & HP Debts[/b]

Description....................Debt......Monthly...APR

Mortgage...................... 140000...(244.3)....0[b]

Total secured & HP debts...... 140000....-.........-   [/b]

[b]Unsecured Debts[/b]

Description....................Debt......Monthly...APR

Barclaycard Plat...............5651......135.......18.03

Barclaycard Free...............1167......100.......16.84

Tesco 1........................3022......92........26.69

Paypal.........................391.51....15........0

Tax Credit overpaymen..........338.......10........0

Tesco Loan.....................5259.41...228.6.....9.5

MBNA...........................1229.03...25........0

Very...........................1174.96...49........0

HSBC ..........................1225.2....50........0

Tesco 2........................344.71....15........22.94[b]

Total unsecured debts..........19802.82..719.6.....-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 1,900

Expenses (including HP & secured debts). 1,155.88

Available for debt repayments........... 744.12

Monthly UNsecured debt repayments....... 719.6[b]

Amount left after debt repayments....... 24.52[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 313,600

Total HP & Secured debt................. -140,000

Total Unsecured debt.................... -19,802.82[b]

Net Assets.............................. 153,797.18[/b]

[i]Created using the SOA calculator at www.stoozing.com. 

Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

sharpe106

Before anybody can advise you on selling your house and down size what is the difference going to be? Will it actually make that much difference once all fees are paid?

Annie161

Hello, and thank you for reading. I am looking to sell my house for around £310k and buy for around £200k. I have £170k equity and would after fees etc of about £10k and my debts of around £20k hopefully would be able to get mortgage for around £60k?

sourcrates

Wow, big numbers, I live in a mud hut worth 20 quid, by comparison, you have massive equity, in this instance you may benefit from selling up and moving, just don’t run up the debts again, correct budgeting is the way forward.

sharpe106

Yes with them figures and living by yourself you would be stupid not to sell up and restart. Your other bills will go down as well with a smaller property, so would be even easier to budget. 
Have a play around with the calculator and put the estimated bills in for the kind of place you would want and have a look at the savings, you probably be surprised how much you would be saving without having to change your lifestyle much.  

Galloglass

correct budgeting is the way forward.

As an alternative, why not try [hyper]budgeting and really get to grips with your spending and pay down your debts. 

If after 12 months you're not making the progress you think, then move. Trying to move in the current environment is not a good idea. Even the banks are battening down for some difficult periods so budget first, move later.

BabyStepper

You need to have your house valued to make sure you still have the equity you think you do. It's free, and at least you'll know what your options are.  

Also, as a self-employed person, you could put your insurance and HCPC fees through your business accounts and not pay tax on them. They should be kept seperate anyway. 

Without the income from your son, you're not solvent your budget needs some work. No haircuts? No emergency fund payments? Where did the £1100 come from? 

RAS

Hi
Your friend knows you much better than we do, but having an interest only mortgage suggests you've been scraping by and avoiding dealing with the underlying problem for a long time.

First off you need to get to grips with your expenditure as you are not solvent. And you need to separate out your business and personal expenditure. Is the car used for work rather than personal travel, for example?

What was the loan for? Debt consolidation? 

You need to pay off Very promptly and close the account. You simply can't afford to be buying clothes on credit. If fact except undies and a couple of pairs of shoes, if necessary, you should not be buying and clothes for the next two years. That helps you get things under control.

Now is not a good time to be selling a house, as there will be a lot of distress sales. Can you take a lodger, it's tax free upto £7k and a couple of years could make a serious dent in your debts. You'd need to be pretty strict upfront on the fact that you weren't offering tropically heated accommodation and 20 minute showers but...

Once you've changed your mindset and reduced your debt, then downsize.

Brenster

I wouldnt sell your house as you are quite well off when you consider the equity in your house.  
I would do the following;
Remortgage to release £20k, so you will have a mortgage of £160k, i imagine your payments over 20 years may go up by 50-75 / month as a result of this.  Given the equity you have, i imagine re mortgaging shouldnt be an issue.
Then repay all your CC's so you have ZERO debt.  Maybe keep a 0% card in case of emergencies (boiler breaking down etc.....An emergency is not a week in Spain !)
And from here only spend within your limits, perhaps targetting to put 10% of your wage into a savings.
NOTE : the above will only work if you address your spending habits.  if not the whole thing will be pointless.
Good Luck.

sharpe106

In 11 years you are going to have to move anyway to repay the mortgage. Assuming the house was once a family home and only you, seems pointless paying to keep it. You could get a place now cheaper and in 11 years maybe mortgage free.

ohdearhowdidthathappen

I wouldn't sell at the moment personally, I'd spend the next year or so paying down as much as possible and then look at it again.  Perhaps remortgage to pay off debts on this occasion (or at least the ones with high interest rates).  You don't say how old you are, but could you move to a capital repayment mortgage at the same time and pay it all off before you retire?  That way you could downsize at that point and have some extra money in retirement.
Could you get a lodger in to help with costs?  
If you do decide to sell, you need to be really strict as you'll only be able to downsize once really.... and then really focus on paying that smaller £60K mortgage off.
Good luck