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Would you sell your house to pay debts?

(51 Posts)
blueistheonlycolourwefeel Tue 22-Nov-16 14:08:42

We are struggling with considerable debt and our house has quite a lot of equity in it which would easily cover our debts and leave us with a large chunk towards a decent deposit on another house.
Would you consider selling the house and renting for a year to improve credit rating and then get a mortgage with the deposit?

Potatoooooo Tue 22-Nov-16 14:12:03

Yes, considering that you will still have some left over for a deposit on another house it seems fair to do that.
As long as your credit isn't ruined anyway.

bibbitybobbityyhat Tue 22-Nov-16 14:15:03

I would have to be pretty desperate ... it's the stamp duty issue.

blueistheonlycolourwefeel Tue 22-Nov-16 14:22:23

We're below the stamp duty threshold presently. We're looking at about £50k left for a deposit....

blueistheonlycolourwefeel Tue 22-Nov-16 14:23:44

Actually, I'm lying....we're not, but it's only about £2000.

expatinscotland Tue 22-Nov-16 14:28:48

No, I wouldn't. Your credit rating might be shot to hell and then you may find it quite hard to get a private rental without fronting a lot of rent. You might find it difficult to get a mortgage, too. Oh, and you'll get a 6-month short-assured tenancy for starters, which means in that 1 year, you may have to move twice - and pay dearly for it (agency fees and moving costs).

frenchfancy Tue 22-Nov-16 14:32:20

Have you talked to the bank to see if you can increase the mortgage on your existing house to release equity. Cheaper in the long run than selling and buying another property.

Hellmouth Tue 22-Nov-16 14:34:14

No, I wouldn't. Your credit rating might be shot to hell and then you may find it quite hard to get a private rental without fronting a lot of rent. You might find it difficult to get a mortgage, too. Oh, and you'll get a 6-month short-assured tenancy for starters, which means in that 1 year, you may have to move twice - and pay dearly for it (agency fees and moving costs).

This.

I think you should check out your credit report first and also speak to a financial adviser. Just because you have a mortgage now does not mean you will get one again, particularly if you do have a lot of debt.

Spam88 Tue 22-Nov-16 14:34:54

No I really wouldn't. Have you looked into getting help with your debts? My parents ended up getting an IVA when they got themselves into a bit of bother. I don't know the details, but I think essentially a company made arrangements with all their debtors on their behalf to repay at a rate my parents could afford, so essentially they ended up paying everything off but it was over a longer time scale and without more interest being accrued.

Kidnapped Tue 22-Nov-16 14:35:15

I'd look into remortgaging first.

Even if you could halve the debts, then that would be a start.

You'd need to be 100% disciplined in paying off the rest of the debt ASAP though. Absolutely no running it up again.

Wishfulmakeupping Tue 22-Nov-16 14:35:38

Could you do an equity release from the house?

HeCantBeSerious Tue 22-Nov-16 14:38:00

My best friend has just done this. Downsized, debt free and absolutely loving it.

DinosaursRoar Tue 22-Nov-16 14:39:13

I would look at remortgaging first too - unless you are in a position do downsize (eg. if you are in a 5 bed house with only 1DC and could easily live in a 2/3 bed). If you wanted to do something like that, I wouldn't put the renting gap in.

If you have DCs, I wouldn't give up a secure home for an unsecure one - it's very, very hard to evict you from a property you have bought even if you have debts you aren't paying secured on it, if you are in a rented property, it's relatively easy to get you out.

LIZS Tue 22-Nov-16 14:39:14

Definitely. There is no point accruing debt and interest while there is money tied up. Borrowing more to pay it off is equally unwise.

blue25 Tue 22-Nov-16 15:35:11

Only as a last resort. There's a danger you won't get another mortgage and be stuck renting. Mortgage criteria have become much stricter recently.

HeCantBeSerious Tue 22-Nov-16 18:00:52

My friends were in around £30k worth of credit card debt, with her having gone self employed within the last year and a household income of around £40k. They didn't seem to struggle with getting a mortgage at all.

HyacinthFuckit Tue 22-Nov-16 18:06:59

No.

GrabbyGrabby Tue 22-Nov-16 19:06:28

I'm sure you have already thought of it but can you rent a room out?

(Sorry if this has been mentioned already)

bibbitybobbityyhat Tue 22-Nov-16 19:30:01

Out of interest, why would selling your house and renting for a year or two then downsizing mean that your credit rating would be "shot to hell"?

We are thinking of doing this soon and I'm perturbed to read that. Or have I got the wrong end of the stick?

(apologies for thread derail)

tiredandhungryalways Tue 22-Nov-16 19:36:26

Depends on your credit score. You may struggle to get a mortgage again if you clear this one

bibbitybobbityyhat Tue 22-Nov-16 19:41:20

Ok so not a problem if you don't want another mortgage?

sabbby82 Tue 22-Nov-16 19:41:46

We were in same position, considered selling but worried about getting a mortgage again in 1-2 years (when credit rating was better). We did an IVA which has worked out fine.

Manumission Tue 22-Nov-16 19:44:11

No, sit tight and both go into IVAs if you have to, but hang onto the house like grin death.

Manumission Tue 22-Nov-16 19:44:26

grim ^

EssentialHummus Tue 22-Nov-16 19:52:00

No, don't do it. Release equity from the house if you can.

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