Consolidate or sell?

MBH7112

My partner and I are after some thoughts and opinions on what we should do to find the best way forward for our finances.  Over the past few years we have overstretched ourselves, much the same as many others.  I’m now 50, she is 47, and we are both at the point in our lives with kids grown up and gone that we want to enjoy life a little more.  Not enough disposable income is the big hurdle and we cannot agree upon the best way forward.  She would like to sell the house and with the equity buy somewhere smaller outright, pay off all our debts and live comfortably off our debt free income.  I would prefer to take a secured loan on the house, to match the mortgage term of 16 years, that would clear our debts and allow us to remain in our house.  We barely make ends meet at the moment and have to watch every penny, but we’ve had enough of that.  My way would indeed leave us with a mortgage and a secured loan, which we would consolidate again in a year or two into one mortgage, but more importantly would save us around £850 per month with which to enjoy life.  My partners way would indeed free up a lot more than £850 for us to enjoy life on, but we would be selling our home to do it.  I am not blind to the benefits of her way, but I struggle with having to sell the house.  To give some context to all of this, the house is worth approx.om £430,000, the outstanding mortgage is approx £154,000 and we have unsecured debts of approx £25,000 and we have a monthly joint income of £3000.  We have already agreed that a compromise of selling and having a smaller mortgage and no debts could be a solution.  Can any of you out there provide a different perspective on this or possibly an alternative solution?  Many thanks.

MovingForwards

Post on this board:
https://forums.moneysavingexpert.com/categories/debt-free-wannabe

Get help and support as consolidation of debt into your home is not recommended.

DrEskimo

As above, I don't think either option is particularly effective.

Selling your home is a long and costly process and in theory it seems simple, but finding a house you like in the area you want for much cheaper is not always possible in practice.

Consolidating your unsecured debt to secured debt is nearly always advised against. You are putting your home at risk and run the risk of running up further debts on top. Not to mention stretching it over 16yrs will cost you a lot in interest.

Far better is to go over your spending, work out where you can cut spending or increase income. Work on paying down the debt as much as you can and then focus on savings for the future.