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Original poster

bad financial situation, sell house?

73 replies

blackmonday · 12/03/2010 15:28

I love my home so much but we are in a real financial mess. We are over £35k in debt. We have most of our debt with payplan on a dmp but still owe about £3k on top of that. dh is self employed and not bringing in enough. We have no access to any credit so are getting to the stage where we are down to our last penny and household bills are not getting paid. We have never missed a payment on our mortgage and in todays market probably have about £35k equity in our property. I know most of our creditors would take offers on what we owe and we could probably clear all our debt for about £20k. But then the kids would lose their home, we would never get a mortgage in the future and would have to rent for a long long time if not forever. We are approaching 40 so not that young anymore. Would you sell and go into rented to clear the debt or would you hang on hoping things improve?? I am looking round for things to sell on ebay at the moment to pay my gas and electric dd. that's how bad things have got

OP posts:
noddyholder · 12/03/2010 15:34

Could you let a room to earn some money?It is tax free up to a certain point

thrifty · 12/03/2010 15:35

if you didn't have the debt, would you be able to manage on your dh's income? i.e. bills mortgage etc?

ANTagony · 12/03/2010 15:36

Will your DP's situation improve?

Could you rent out a room?

Are you entitled to any benefits, have you double checked?

Can you get to a citizens advise and go through all the numbers and see if there is a way forward?

Does your local council offer one off emergency payments?

Could you extend the morgage to relieve and spread out the pressure of some of the debt hence increasing number of payments but reducing the monthly amount?

Have you tried approaching your morgage company for a payment break to get ontop of the other debt? The interest would get added to the loan but it might buy you time.

Original poster
blackmonday · 12/03/2010 15:40

hi, thanks for all the helpful advice. We don't have a spare room to rent out. I have asked the mortgage company and they don't offer a payment break. The mortgage is already over 25 years and they won't extend. our position may improve as now summer is approaching dh may get a bit more work. We are just so stressed with it all and worried. It's all we ever seem to talk about. I really don't want to leave our home. the children would be devasted, but then I think of how lovely it would be not to have a mountain of debt around our necks

OP posts:
Original poster
blackmonday · 12/03/2010 15:41

we get tax credits. i work too but only part time as we don't have any family to help with childcare we are actually better off financially than we would be if i were full time. Low wage earner tho

OP posts:
claricebeansmum · 12/03/2010 15:44

I think you need to get some sound advice over this. How did you run up 35K debt in the first place? Perhaps a visit to CAB?

morningpaper · 12/03/2010 15:45

I would get rid of the house while you can

you may get to the stage of having it repossessed and then you will be in a far worse situation

Renting can be fine, you can start again

I would do that personally

Original poster
blackmonday · 12/03/2010 15:46

stupidity on the most part claircebean. quite a bit went on living expenses when dh had a bad fall and didn't work for a year. wish i could turn back the clock I could try CAB but as i'm already on a dmp and not eligible for IVA i don't know what they would advise

OP posts:
itsmeitsmeolord · 12/03/2010 15:46

I wouldn't sell, it's your only asset.

You have to look at why you are down to last pennies and what you can do to maximise your income.
(i'm not implying you are wasting money by the way)

  1. ebay and amazon to sell off everything that you can to pay down the debt outside of the DMP.
  1. Do you work? If not, can you agree with dh that you will get a part time evening job for a year to bring in more cash to clear that 3k. Evening work would mean no childcare if dh is home. Bar work, waitressing, cleaning etc.
  1. Can dh consider getting employed rather than self-employed, even if it is just for a year. Surely a regular wage is easier to budget with and your DMP would revolve around that. At the moment I suspect you are mainly struggling because the DMP was based on an income that is not happening right now.

Go on to moneysavingexpert and look at the "dailyclicks" threads. For example, I do online surveys which earn me vouchers throughout the year that I can use for christmas. (Toluna)

  1. Make sure you are getting the best deals on all insurances, pensions, phone, broadband etc. Check on moneysavingexpert, check online and then only purchase through Quidco so that you get cashback. For example, I have just renewed my house insurance and got £50 tesco vouchers plus £50 cashback. I did my life assurance and got £50 plus £30 M&S vouchers. I put alll the vouchers towards birthdays and christmas. The cashback can take up to 6 months to come through so I leave that as a form of savings.
  1. Mealplan and make sure your groceries are costing as little as possible.
  1. If you are on a water metre get a hippo for the toilet cistern, they really do cut bills, also switch tap off when cleaning teeth. Little things make a big difference.
Turn off lights, nothing on standby, don't use tumble dryer if you have one etc.
  1. Look for clothes in charity shops before looking in high street.
Alouiseg · 12/03/2010 15:47

Horrid situation for you to be in, i did just look at your previous posts and this situation is a bit of an ongoing problem. Please take some professional advice on this. The stress must be awful. Good luck x

noddyholder · 12/03/2010 15:47

Having read your 2nd post I now think sell.Nothing is worth that stress.Home for kids is where you are and a feeling of happiness and safety You don't have to own the house to provide a good home.The relief when you pay those debts off will be worth it xx

thrifty · 12/03/2010 15:49

would you be able to manage if you got rid of the debt though, or would you just build up more debt?
have you trimmed all your other expenses right down (i.e. shopped around for the cheapest gas/elec, do your weekly shop at lidl, get freesat instead of sky etc etc)?

BuryNoelEdmonds · 12/03/2010 15:53

If you sell, can you reasonably downsize? What is to stop you losing the house you eventually move to?

How realistic is it for dh to find a different kind of job?

Or post your outgoings and see if MNers can strip it back any further?

PandaEis · 12/03/2010 15:54

hi, have you looked into getting your mortgage payment reduced? or interest only? i have had to do this as we are in a crappy financial situation (DH was out of work for 3 months, i earn a low wage etc bills up to our eyeballs..) we have halved our mortgage payment for 2 months and once the 2 months is up then we are going to interest only for 12 months. not ideal but better than struggling and ending up cutting your losses. what does your DH do for a living? could he work with an employer to earn a little more? you would be entitled to more benefits that way (tax credits etc) it may help you move out of the financial black hole a little easier

thrifty · 12/03/2010 15:55

i'm with itsme on this, if you can avoid having to sell, it will be worth it in the long run (if you can manage on what you have coming in minus the debt). however.

how big is your house?, how many kids do you have? would you be able to downsize the house and use the equity to pay off your debt, but still stay on the property ladder?

morningpaper · 12/03/2010 15:56

will it be worth it, if property prices decrease and interest increases?

MillyMollyMoo · 12/03/2010 15:59

"Nothing is worth that stress"

Having rented by choice for three years I found that quite stressful and when my eldest on Christmas day last year announced she wanted to propose a toast to having 2 Christmas' in the same house it really hit home how important stability is for children.

We are in a similar position and I will not leave my house without a fight and possibly being dragged lol
You are clearing the debts at a rate acceptable to the creditors so just hang on in there and keep doing what you are currently doing.

noddyholder · 12/03/2010 16:02

Hang on in for what.Interst rates will rise and prices fall all economists are predicting that.It is not an assett if you are 35k in debt just to keep it.House prices will one day be more sensible and until then you can rent save some money for a deposit etc.If you keep on as you are 35 will soon be 45

thrifty · 12/03/2010 16:09

hmm... its a tricky one really without knowing the ins and outs.

would renting be less than your mortgage? would you be in a position to save as noddyholder says? or would it just be a short term fix?

ABetaDad · 12/03/2010 16:16

You do not own the house. The mortgage company do. The house is only worth £35k more than the mortgage and you have £35k unsecured debt at a high rate of interest elsewhere. The basic maths is your total debts are equal to the value of your assets. You own nothing and have no net wealth oter than your personal possessions and your pensions (if you have them).

If you rented a similar property to your current house it is very likely that it would cost less in rent than the interest you are paying on yoiur mortgege plus loans plus the other costs of home ownership (e.g insurance, repairs). If that is the case, sell up and rent. You will be far better off and have less stress.

Renting is insecure but so is living on the edge of repossession. I strongly recommend you look to see how much it woudl cost to rent a house like yours and compare that rent with your total interest costs and other house ownership costs and make your decision from there.

Northernlurker · 12/03/2010 16:17

Your dh's fall - was that at work - is there any claim to pursue against anybody there? I know nobody likes that sort of culture BUT you're in a mess because of it and if there is any liability - well you are entitled to claim it.

MillyMollyMoo · 12/03/2010 16:39

You need to look at what will happen in the worse case scenario that you are out of work again and on benefits.

In that situation you will be at the mercy of a landlord accepting housing benefit, you may only be allowed a 2 bedroomed house based on the number of children you have and you may need to move every 6 months and find another LL prepared to take you on. Have a look at what £100 a month would cover in rent in your area. Here that would be a two bed dump in a dangerous area, compare that to your current house.

In comparison if you stay in your own home, the benefits department will pay up to £200k of interest payments - around £950 per month, you stay in your house without the upheaval and removal costs.

You need to hold on by the finger nails IMO if you can, nobody is issuing you with court proceedings, all the stress is you worrying about what might happen, it might not so sit tight.

And keep in touch with your gas and electric supplier, British Gas have a policy of not cutting anyone off although they may insist on a meter, same with the water company.

MillyMollyMoo · 12/03/2010 16:41

*sorry £100 a week, not a month in housing benefit with 2 children.

morningpaper · 12/03/2010 16:48

I think the worse case scenario is that interests rise, your house price drops, you can't pay the mortgage, your house is repossessed, you then have 35k debt AND negative equity AND live in rented lodgings

FWIW

noddyholder · 12/03/2010 16:52

Sit tight and wait for what?The lottery?Unless you have no mortgage at all you do not own your house until the last mortgage payment is made,at any time if you default the bank can take your house