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    • desperate housewife
    • By desperate housewife 2nd Aug 18, 1:44 PM
    • 25Posts
    • 3Thanks
    desperate housewife
    Moving house to clear mortgage but not debts
    • #1
    • 2nd Aug 18, 1:44 PM
    Moving house to clear mortgage but not debts 2nd Aug 18 at 1:44 PM
    We are currently on a DMP....a long way to go but we have equity in the house. If we moved it would mean we could pay off our mortgage but sadly not enough for the debts. However this would obviously mean we had more money to pay our creditors.....I am desperate to clear the debts ASAP ....any advice please. Many thanks
    JRP
Page 2
    • Chocolate_Teapot
    • By Chocolate_Teapot 3rd Aug 18, 5:03 PM
    • 7 Posts
    • 3 Thanks
    Chocolate_Teapot
    Have you contacted the debt management plan company? We did this last year, sold our home, paid off our debt management plan and we are now currently renting. When we contacted stepchange before putting our house up for sale they told us any equity from the sale of the house HAD to go to the creditors first. Just a thought to double check with them first.
    • another casualty
    • By another casualty 3rd Aug 18, 6:35 PM
    • 3,718 Posts
    • 5,794 Thanks
    another casualty
    How is your dmp managed ? Self managed, or stepchange / payplan etc? Do you have an annual appraisal from your creditors?

    When I was on a dmp with payplan , I was given a yearly appraisal .
    One thing that was always asked was the equity of my home ,and would I consider remortgaging . I wasn't pushed , but it was a routine question that had to be asked . Taking all that into account , I would imagine that if you did move and still owed money on your dmp, then you would probably be asked to pay more and settle in a shorter period than you presently do . Of course, don't forget the cost of moving and legal stuff etc.

    Best of luck
    • Beetroot24
    • By Beetroot24 4th Aug 18, 9:41 AM
    • 35 Posts
    • 31 Thanks
    Beetroot24
    Is it possible for you to sell, pay off your DMP, and then buy a smaller place with a small mortgage?? (Which you could possibly overpay, subject to your circumstances)
    • tlc678910
    • By tlc678910 4th Aug 18, 10:07 AM
    • 748 Posts
    • 1,174 Thanks
    tlc678910
    Hi, if you sell and buy in one transaction (in an ordinary property chain) the money will never hit your accounts as the solicitor will handle it for you. Your creditors will be no worse off.

    You can change your address as you have moved house but don't need to mention the financing of it. If anyone does enquire then simply "we moved house without extending our borrowing".

    Remember if you want to move you don't have a choice about paying back your mortgage borrowing - your mortgage lender requires that you do so and your solicitor won't give you a choice about it. Your mortgage is secured against the property while your other debts (I assume) are not. Because of this it is not a choice to prioritise your mortgage borrowing - you must. The equity you hold is already there in the house and you are simply moving it from one property to another.

    If any of your debts hold a charge against your property they will also need to be paid off on the sale.

    Tlc
    • Suseka97
    • By Suseka97 6th Aug 18, 10:54 AM
    • 482 Posts
    • 608 Thanks
    Suseka97
    Have you contacted the debt management plan company? We did this last year, sold our home, paid off our debt management plan and we are now currently renting. When we contacted stepchange before putting our house up for sale they told us any equity from the sale of the house HAD to go to the creditors first. Just a thought to double check with them first.
    Originally posted by Chocolate_Teapot
    I think that was pretty unfair of SC and I'm surprised they told you that you HAD to use your equity to pay off debts. A DMP is an informal agreement and you are/were under no obligations (legally wise) to clear your debts with any equity. That said -if you wanted to and that allowed you to become debt-free well that's great for you.

    If it were me, I wouldn't ask SC what their views on this are.
    LBM April 2013 £85k /14 Creditors
    SC DMP May 2013 - July 2017 (£74k repaid)
    SM DMP July 2017 to date / £9k o/s
    • Suseka97
    • By Suseka97 6th Aug 18, 11:02 AM
    • 482 Posts
    • 608 Thanks
    Suseka97
    It sounds ideal really.....itís the legal side of it that troubles me.....I want it done right so I donít upset the creditors. The smaller house without a mortgage is perfect. Just not enough equity to pay the debts too.....I donít want to get too excited and it doesnít work out....
    Originally posted by desperate housewife
    Seriously, you are overthinking this.

    If it suits you/your lifestyle to downsize in order to be mortgage free - go for it. It's none of your creditors business and as long as you keep to your end of the bargain (paying via the DMP) then why would they concern themselves with what you do or where you live.

    Yes, your address will change -but all you do is inform them of just that and carry on with your payments. If becoming mortgage free allows you to pay more to your creditors and you want to do that, great -although if it were me I'd save the extra money for F&Fs.

    Ultimately this is your DMP and its your choice how you handle it.
    LBM April 2013 £85k /14 Creditors
    SC DMP May 2013 - July 2017 (£74k repaid)
    SM DMP July 2017 to date / £9k o/s
    • desperate housewife
    • By desperate housewife 7th Aug 18, 11:14 AM
    • 25 Posts
    • 3 Thanks
    desperate housewife
    Have you contacted the debt management plan company? We did this last year, sold our home, paid off our debt management plan and we are now currently renting. When we contacted stepchange before putting our house up for sale they told us any equity from the sale of the house HAD to go to the creditors first. Just a thought to double check with them first.
    Originally posted by Chocolate_Teapot
    This worries me as SC have advised itís ok.....Thank you for your time though. I hope things are going ok for you now.
    JRP
    • desperate housewife
    • By desperate housewife 7th Aug 18, 11:16 AM
    • 25 Posts
    • 3 Thanks
    desperate housewife
    Seriously, you are overthinking this.

    If it suits you/your lifestyle to downsize in order to be mortgage free - go for it. It's none of your creditors business and as long as you keep to your end of the bargain (paying via the DMP) then why would they concern themselves with what you do or where you live.

    Yes, your address will change -but all you do is inform them of just that and carry on with your payments. If becoming mortgage free allows you to pay more to your creditors and you want to do that, great -although if it were me I'd save the extra money for F&Fs.

    Ultimately this is your DMP and its your choice how you handle it.
    Originally posted by Suseka97
    Thank you so much....really appreciate your time. Yes you are right. Definitely want to do offers but it will take some serious saving but canít wait to have my life back.....Iím constantly anxious about the dmp.
    JRP
    • desperate housewife
    • By desperate housewife 7th Aug 18, 11:18 AM
    • 25 Posts
    • 3 Thanks
    desperate housewife
    Hi, if you sell and buy in one transaction (in an ordinary property chain) the money will never hit your accounts as the solicitor will handle it for you. Your creditors will be no worse off.

    You can change your address as you have moved house but don't need to mention the financing of it. If anyone does enquire then simply "we moved house without extending our borrowing".

    Remember if you want to move you don't have a choice about paying back your mortgage borrowing - your mortgage lender requires that you do so and your solicitor won't give you a choice about it. Your mortgage is secured against the property while your other debts (I assume) are not. Because of this it is not a choice to prioritise your mortgage borrowing - you must. The equity you hold is already there in the house and you are simply moving it from one property to another.

    If any of your debts hold a charge against your property they will also need to be paid off on the sale.

    Tlc
    Originally posted by tlc678910
    Many thanks....really appreciate your advice. Great! X
    JRP
    • desperate housewife
    • By desperate housewife 7th Aug 18, 11:19 AM
    • 25 Posts
    • 3 Thanks
    desperate housewife
    Is it possible for you to sell, pay off your DMP, and then buy a smaller place with a small mortgage?? (Which you could possibly overpay, subject to your circumstances)
    Originally posted by Beetroot24
    Fab idea.....donít think a mortgage company would touch us with a barge pole!
    JRP
    • Soundgirlrocks
    • By Soundgirlrocks 7th Aug 18, 5:06 PM
    • 566 Posts
    • 849 Thanks
    Soundgirlrocks
    Fab idea.....donít think a mortgage company would touch us with a barge pole!
    Originally posted by desperate housewife
    I'm not sure it is a good idea, its effectively turning unsecured debt into secured debt.

    If you can downsize and pay off the mortgage then have more to chuck at the DMP then that seems sensible & and protects you against and changes in circumstances.
    • desperate housewife
    • By desperate housewife 7th Aug 18, 5:43 PM
    • 25 Posts
    • 3 Thanks
    desperate housewife
    I'm not sure it is a good idea, its effectively turning unsecured debt into secured debt.

    If you can downsize and pay off the mortgage then have more to chuck at the DMP then that seems sensible & and protects you against and changes in circumstances.
    Originally posted by Soundgirlrocks
    Many thanks....yes I hope this could work. We would want to my offers after saving up ....however we would need more than a year ( thinking about the annual assessment) so then Iím not sure how it would workout. Obviously they would see we wouldnít have a mortgage and understably would want more monthly....then the plan of making offers would be out of the window....
    JRP
    • Beetroot24
    • By Beetroot24 7th Aug 18, 10:07 PM
    • 35 Posts
    • 31 Thanks
    Beetroot24
    I'm not sure it is a good idea, its effectively turning unsecured debt into secured debt.

    If you can downsize and pay off the mortgage then have more to chuck at the DMP then that seems sensible & and protects you against and changes in circumstances.
    Originally posted by Soundgirlrocks


    No it's not turning unsecured debt into secured debt, as she already has a secured debt, and unsecured. It would be clearing the unsecured debt and potentially reducing the secured debt with whatever is left.


    It was just a query in response to Chocolate_Teapot's comment that they had to pay the creditors first from any equity.
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