Selling to pay off debt

[Chocice35]

Ok this may be a long one and controversial but here goes.
I am 28 with two children, I have had a mortgage for 5 years and a car etc. my partner and I have around 20k debt 12k which is on credit cards but on a 0% balance transfer. We are paying close to 1,000 a month on our debts. We are seriously considering selling our home using our equity of around 80k to pay off debt and start again.
now I’m not into the very traditional way of thinking, or following what the government want us to do which I have done until now, however I’m not sure if we necessarily will want to own our home again.
our plan would be to sell up and either move into private rented, yes slightly more expensive however we’d be sooo much better off as we wouldn’t have the debts to pay.
we would put a good chunk of money away, should we want to buy again in the future though.
I am unable to remortgage because it’s only me on the mortgage due to my credit being better and I’m on a reduced income to when I first got the mortgage so that isn’t an option.
tbh I think we are just wanting a change and a bit more freedom. Because we are still somewhat young then in the future we could buy again but buy jointly so that we could borrow more.
please don’t just say “you’ll never get on the property market again” as this isn’t helpful or factual. But I’m looking for tips from anyone who has actually done similar or in a similar situation.
or is everyone just in debt 🤣

I think that I would try to stay if you can.
it costs a lot to move/ buy a home.
do have a look at the Debt Free Wannabe section of Martin Lewis's website.
youre dong really well to be paying off so much!

If you could buy together again in the future then there's nothing stopping you keeping your house just now and remortgaging once you're debt-free and potentially able to get a better mortgage deal with 2 of you. No need to move your young kids into an insecure rental.

@LakieLady thank you for this advice yes we’ve recently gone through all transactions and set up allocated pots for certain things we need to spend I.e fuel, food shopping etc

how much is rent in your area
could you afford to rent and then have to move every 2 -3 years. Cos that’s the reality of renting

Do you have pets. If so most landlord won’t accept you
some don’t even want kids 😂

have you got the money to pay for a deposit / each time you have to move

will you have to pay capital gain tax if your not buying anything.

your paying 1k a month which is amazing
but maybe pay a little bit less so you can do stuff
even if you paid 800 and kept back 200 to enjoy stuff with your kids
ypu would still be making that debt loads smaller and still be having a little bit of fun

but honestly keep the house it’s security
you may never ever get back on the market again

Oh OP, this is madness. If it were only you and your partner it would still be a very bad idea- with 2 young children it is almost unconscionable. You are risking the very roof over their head. I have quite a number of staff who predominantly live in private rented accommodation. For many of them they had lived in the same house for years, decades in 2 cases. In the last three or four years, the landscape has changed dramatically. Landlords seem to be selling up at rate I have never seen before. They are constantly coming to me in tears because they have been given two or three months notice to leave. Sometimes the landlord wants the house for his daughter who is getting married, another wanted to move his mother into a bungalow he rented out, others needed to release the equity to pay their own bills. These are FAMILIES who have faced impending homelessness. Parents have been absolutely distraught trying to rent another house and they’re just isn’t the housing stock available. Children have had to move school, leave their clubs and activities, leave their , their friends and maybe even grandparents and family. Rents are being hiked at a frightening rate. Trying to get repairs done it’s a nightmare- look up the BBC News website this week - a 5 fold increase in complaints to the housing ombudsman about repairs in private rented accommodation in the last five years.
I know you are young, I know you feel weighed down, but it is nothing to the fear of being at the mercy of the private rental sector.

Releasing £80k to repay £20k is a terrible idea.

Just knuckle down and repay it. Use the debt snowball method (Dave Ramsey).

and with those pots, remember you don’t have to spend it all. If there’s anything left, don’t be tempted to carry it over or treat yourself. Make an extra card payment.

If you were to find an extra £20 a week you could then have it paid off a month earlier. You can do this!

@Chocice35 no dont sell your house!!! you will find it really difficult to get further up the ladder if you rent then start from scratch! carry on paying the debt at 1k per month and it will soon be gone.

You would be crazy to do that! You will be debt free in 2 years!

https://capuk.org/

Get some independent advice from the CAP charity as they're very helpful, I think sellng your house isn't the wisest thing to do.

In the meantime, go through all your monthly outgoings & see where you can make savings by switching utilities etc. Set yourself a budget and stick to it, cut down on eating out etc. Make over payments on your debt repayments.

Can you switch the credit card debt to a zero interest card? Cut up all your current credit cards and stick to a budget. Do whatever you can to keep your house because selling it would be short sighted.

Keep paying your debt down, taking advantage of zero interest transfers of your credit debt if you can.
Starting again will mean saving a deposit on top of paying your debts.
It might mean a few careful years but it will be worth it.

Also, see if there's anything you can sell off to pay towards your debt.

Can you both retrain or change to higher paid jobs?

Nope this is crazy.

Knuckle down and pay the debt. Doesn’t matter what else you sell- anything. But not the house.

Get an extra job at the weekend- one of you Saturday one of you Sunday. Take overtime. Sell/ downgrade a car. Anything.

You make it sound so easy but I don't think you are realistic at all. I used to be a LL and we always did credit checks on all adults before accepting a tenant. These days rental properties are even fewer because it's so complicated and expensive being a LL so the competition for the few properties that are around is fierce and there will always be a tenant with a better credit rating than you and your partner. Then there is the issue of having to move every so often because LLs are selling at rapid speed these days. You have young kids and once they are in school you don't want to keep moving them every time you are asked to leave your home.

You have a very shortsighted way of thinking and you need to stop doing that. You don't give up your secure home when you are a parent just because you want more fun money. The fun money will come to you, but you have to put in the work and work to lower your debt first.

No, absolutely not. There are better ways to do this.
We fell out with the Natwest over £17,000 and they ended up securing a charge against our house which was fine. Whatever
It meant the interest was frozen. They couldn’t add any different charges and of course the house went up in far far more than £17,000 by the time we sold it.
But we stayed in the house for another 10 years
You need to speak to somebody and get some proper advice, but personally I would not be selling your house that’s not the solution

As parents I think you need to grow up a bit. If most people don’t do this, there is a reason for that.

I know it feels like the best solution but honestly I think you'd be diving in to a different set of stresses. At the moment you are in control of the stress, it doesn't feel pleasant but with a plan there's an end goal and you're still on the property ladder with no debt. Selling and renting means you'll have no debt but you will be at the mercy of a very difficult (and expensive) rental market and your landlord/s.
Look up Dave Ramsey. Looking past the religious bits and the American-ness he has a very good plan. Stick to that for two years (you'll likely get debt paid off faster once you get in to it) and you'll be in a great position.

@PringleDiamond im not I’d agree with saying we need to grow up a bit haha.. but it feels like if we have an opportunity to become debt free and have money saved away then why not? Of course there’s some very helpful comments on this thread about landlords etc so lots of factors for sure

@Whyonearthwouldyou thank you for this info, I think it’s the fact I hate knowing I have the debt if that makes sense? Luckily my credit cards are already in 0% interests right now anyway and in 2 years from now the loan itself will be repaid.
we have already changed our spending so much so I’m confident we wouldn’t end up in this situation again. I hear what everyone is saying about stability though

Yes 28 is young but time
flies. I don’t think that you will ever buy again. If it’s on 0% interest you’d be mad to give up your mortgage. Any spare money you have your going to end up spending it will be hard to save it.

Pay the loan off in 12 months then reassess

What is your partners financial position? Are they helping you with the debts you accrued whilst on maternity? Because they are morally a shared debt.

Please reconsider selling your house though, to have £80k in equity at your age is really brilliant going and you'll get the other debts paid off in no time, or if you are struggling with the £1k a month repayments maybe reduce that and keep flipping the 0% deals paying off the higher interest stuff first.

I know in your head it makes sense and you will feel loaded short term with thousands in the bank and no debt but it will soon get whittled away and rent could still get even worse, we haven't hit Australian or American levels of rent to income disparity yet but it could happen. Please keep hold of your house if you can, the security of being a homeowner when you have a child is invaluable. Xx

My dad had a similar approach to what you are suggesting - he believed for many years that it was better to be in rented accommodation (where someone else did all the upkeep) than to pay for the interest on a mortgage to a bank. He has changed his tune as rents have risen year on year, and he has some significant regrets about not having bought a flat when he had the opportunity. He is now coming close to living on state pension, and he still needs to pay for rent out of the £12k he will get a year.

We have some friends whose circumstances have meant they cannot afford to buy somewhere to live. Twice in the last 3 years they have had a landlord who has decided they need the property back, and they have had to sepnd what little they had saved on house moving costs. The first move they had to downsize from a two bed terraced house, to a one bed flat because of the jump in rent costs in the time they had been there.

I would give serious thought to staying as a homeowner, and learning to tolerate the discomfort of some debt outstanding while you work to clear it.

I personally would not do this. My best friends mortgage is £700 a month. Her neighbours rent in exact same house £1200 a month. Landlords been massively squeezed on all ways and it’s impacting rental prices. Her neighbour also doesn’t get things fixed easily and moans about that a lot. Plus even on a good salary and decent credit scores she needed guarantor and big deposit as her husbands credit score wasn’t that great but not awful apparently. It’s then so hard to move out even to another rental as you need all the credit checks, references, guarantor again, moving costs and disruption. I would say renting is not the easy option in your shoes .

@Hedgingmybetching yeah I can’t fault him to be fair because we’re very much shared with everything so the plan is for us to clear it all together. I think I need to get my head around it’s ok to have some debt? As long as there’s a plan to get them cleared. Thank you for your comments xx