What would you do?

I'm looking for advice and just general opinions on what you guys would do if in this situation.

Basically we are currently renting a house at the moment but we also have a property which own but we rent out. We are struggling from one month to the next and here we find ourselves just a few days after pay day with very little left (less than £100 between my husband and I) to last us until the next pay day next month and still with bills to pay.

We hardly go out, don't lead an extravagant lifestyle but always seem to struggle. Between us we are bringing in over £3,400 per month and our bills are almost equal to this by the time we've paid debts etc, so I feel we are constantly struggling or borrowing from credit unions or short term loans etc from family.

In the property that we rent out we've got around £20,000 in equity and we've got around £18k in debt. My husband has said that he would want to sell the property, clear off all of our debt and basically start afresh and he reckons we would have over £1,000 cash spare every month once everything has been paid.

I feel reluctant to sell it though as there are only 12 years left on the mortgage and I always thought of it as somewhat of a pension fund or something to pass onto our son. I also feel that we would struggle to get back on the property ladder due to bad credit scores that we both have.

Outwith this, we've got a really lovely couple living in the property and it would break my heart to see them have to find somewhere else.

My husband seems to think we should clear our feet now and enjoy the benefit of it now but I feel is that setting us up for a fall in the future? He also thinks that once our credit score has repaired itself then we could even look at small buy to let mortgages and get back on the ladder. We are also due money from a claim which will be around £8,000 but this isn't 100% confirmed yet so don't want to depend on it.

I am completely torn with this and realise I'm rambling on, but just wondered if anyone can offer some advice as to what do you think is the best thing to do?

Thanks for reading. xx
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Comments

  • tjp70
    tjp70 Posts: 464
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    Hi. I understand what an awful situation you find yourselves in, but the very last thing I would do is sell the property. You bring home a good amount of money and your debts are large but not massive. Have you had a good look at your outgoings and seen where you can make savings and economies? Is your debt on 0%?

    Why not post an SOA so the lovely people on here can give some advice.
    If Plan A fails, remember there are 25 more letters
  • sourcrates
    sourcrates Posts: 28,711
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    As homeowners your options are limited, but a debt management plan may be the best way to tackle your debt.

    Dont sell the house, sounds like you have a good income, you just need creditors to stop interest and charges and repay your debts at an affordable rate.

    Contact stepchange, they are a free to use debt charity, they can advise you on a DMP.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • nkkingston
    nkkingston Posts: 488
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    How much rent are you charging versus how much are you paying? Would it make more sense to move back into the house and save having to pay all the extra bits of insurance etc?
    Mortgage
    June 2016: £93,295
    September 2021: £66,490
  • To be honest I definitely don't want to go down the route of doing a debt management if it can be avoided.

    The biggest amount we owe is to the credit union (the only people who would lend to me when my credit was bad) and we owe them £12000 or thereabout as I have £4500 in shares which ofsets the actual £16000 that I owe. My family took a loan out for us also which we still owe around £4000 on and it's in my dads name so we wouldn't want to do anything that would affect that and the rest is on a small loan and just small balance credit cards (with balances of £800 on one and £200 and £300 on other).

    The property would be too small for us to move back into now as we now have a child and we are charging the 'going rate' for the property but we also have to pay a monthly factor fee too. Pretty sure the boiler is going to need replaced soon too.

    I'm tempted to sell it and be pretty much debt free and actually having money to do things each month and buy nice things every month too as I feel we've struggled for so long. But is having that property behind us all it's cracked up to be for the future when we are struggling just now? It's just such a hard decision to make.

    Plus, if mortgages are now based on affordability then maybe if we were to continue renting but then invest in property in the future which could bceome a nest egg then that could be considered. But obviosuly due to bad credit rating (although its getting better now) would that still hinder us? Sorry for all the questions guys. xx
  • another_casualty
    another_casualty Posts: 6,506
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    edited 25 April 2018 at 1:36PM
    Mmm. I would say that you need to do a full s o a here, and we may have more of an idea of what's going on.
    You don't seem to have a lot of equity in your property .
    How much would you say it is worth ? What part of the country do you live in ? Is relocation a better idea? Have you both got good jobs other than renting out your property?
    Just a few questions :)

    Being in debt is stressful to say the least. The hoops people have to go through regarding affordability is stress in itself . Wages are in effect less than years ago.
    Then there's the health side of things . Imho , I don't think we have really come out of the recession . Yes that one . There is talk of another one within the next year or so. Lots to hink about .

    Wishing you all the best
  • I would take a look at what you are charging for rent and what the 'going rent' is in the area to make sure you are getting the most from your investment. I'd also take a look at your own rent and bills and see if there's vita that can be made there, a SOA would help. If you can't or don't want to make changes then you may want to sell.
    19/12/14: Spent 10 years of savings!!
    :heart2: ..... to buy my first home. :heart2:
    11K OP 31.03.19

    Current goal: €151,000 deposit Ireland and counting, to buy Spring 2022 we hope!
  • sorry to sound daft, but what is an SOA? xx
  • Just trying to make up for past mistakes and work towards the future I want :hello:
  • Fireflyaway
    Fireflyaway Posts: 2,766
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    I think I'd move back into the house you own if it's in the right area for work and school etc. Let the folks living there have lots of notice but if renting they know it's not guaranteed forever anyway.
    It will be hard to buy again if you have bad credit and if you have 12 years left it would be sad to start over. I'm wondering why you moved though? Was it too small / not in the right location ?
    Could you increase your income? Can you make savings? I know the feeling of being broke right after pay day. It's not nice. Things can change though.
  • theoretica
    theoretica Posts: 12,256
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    ... we've got around £18k in debt. My husband has said that he would want to sell the property, clear off all of our debt and basically start afresh and he reckons we would have over £1,000 cash spare every month once everything has been paid.

    At present are you paying nearly £1000 a month to the £18k debt?

    Would you find breathing room by extending your mortgage term for a while?
    But a banker, engaged at enormous expense,
    Had the whole of their cash in his care.
    Lewis Carroll
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