Huge debts and mortgage increase...

Hoenir

Is downsizing a realistic option?   Having been accustomed to a comfortable lifestyle. Adjusting to a tight budget can be extremely challenging. Easy to get blown off course as well. If there's an unexpected financial event or a loss/reduction in income to contend with. 

badmemory

I am not sure selling would answer the problem as any rent would likely be higher than the mortgage.

MFWannabe

badmemory said:

I am not sure selling would answer the problem as any rent would likely be higher than the mortgage.

Not sure anyone said renting as an option? Downsizing yes 

badmemory

MFWannabe said:

badmemory said:

I am not sure selling would answer the problem as any rent would likely be higher than the mortgage.

Not sure anyone said renting as an option? Downsizing yes 

njkmr suggested selling & renting in the post before your previous one.

MFWannabe

njkmr said:

I would be looking at selling the house to be honest because its clear at the moment it is too much of a burden.
I would find somewhere cheaper to live for the next few years and get shut of the debt first.
I know it sounds drastic but you are living beyond your means at the moment and need to remove the debt , then build back up again.
I dont want to sound harsh but its property and there are plenty of other cheaper properties that will do for a couple of years until you get back on your feet.

@badmemory njkmr doesn’t mention renting? Mentions selling and finding cheaper property; no mention of renting 🤷‍♀️

njkmr

I said nothing about renting.
Smaller house yes, affordable house yes.

I've just seen your username...lol.

TheAble

Downsizing may be an option but it might be a bit of a wrench given the efforts the op has put into renovating their current place.

Also costs have to be considered - estate agents, solicitors, stamp duty etc.

By cutting a lot of fat from present expenditure it may be possible to avoid this.

libertybelle70

Hi everyone. Enormous thanks for your responses. For everyone who said - we've clearly been living beyond our means for years, that's right. Now we have no choice but to address this head on. We'll cut back as much as possible - it's been extremely helpful to understand where we're overspending and what you'd suggest cutting back to. (I did do an audit by the way these are not figures plucked out of thin air, but just over two months. We will do more of this homework this weekend fo find out where the cash leaks are.). Here's the plan.
1) speak to bank and see if the mortgage term could be extended.
2) identify where cuts can be made and action.
3) I agree about putting house on the market and downsizing, I would have to do this asap and hope that the mortgage company (Natwest) give us some breathing space while the house sells  - we would then buy (not rent!) somewhere smaller and paying everything off. I do worry that this is lots of wasted money in stamp duty if we relocate to the north in a few years but it would mean that we could effectively start again.
4) Speak to Stepchange and see what the options are. But if I'm correct, your DMP stays on your file for 6 years after the debt has been repaid - if we are looking at something similar to a 5 year plan at 10,000 a year as suggested, this would be 11 years.

Thanks again.

Martico

Not quite -  if you default first, then go on a DMP, your file is marked for six years after the default.

RAS

Before you speak to the bank, you need to understand how they mark reduced payments on your credit record, as AP markers affect your creditability. Particularly if you want to sell and downsize, as any markers could affect your ability to get a new mortgage. Could you port the mortgage etc? Not my area, suggest you go to the mortgages forum and ask one of the advisors there what's possible.

Or you could end up with a smaller house and mortgage but higher monthly payments.

Meantime, skim your monthly bill get back to the bone, declutter and sell anything you won't take to a new house. Aim for enough to cover 3 months additional mortgage payment. also look at store cupboard challenges etc.