What would you do?

[fromdunedin]

Would be great to get some opinions on our situation.

DH and I are currently in two bed flat which we own in London. We plan to move overseas in the about 18 months - I am from another country and we plan to move closer to my family. We got out flat for quite a good price so expect to make some money on it.

We were doing some budgets this morning. We hope to make a decent amount on the flat (not life changing but little nest egg amount). If we sold for what we think we can (yes, I know the market will dictate) we could pay off all our debts and put the rest away to save for future move - this would be a deposit for house in new country. We would of course be off the property ladder and would move into rented flat in same area, our expenses would roughly be the same.

By paying off all our debts we would save at least £500 per month (if not more). So we would have savings in bank and then £500 per month better off with no debts. We would try and save as much of that £500 as possible.

We are going to try for baby number 2 soon. The plan is to have baby here, move when he/she is about six months old. One advantage of this plan is not having to sell flat with two children in tow, our plan to move would depend on how quickly (or not) the flat sells. If in rented we give notice and go.

I think I have two questions in my head:

1. Is it sensible to sell up, put money in bank? I feel nervous selling up now, but in reality we are going to do it in 18 months anyway.

1. Given that we are going to sell up soon anyway it seems sensible to me to save some money in the process. I think I am nervous because you never know what is in the future. What if we completely changed our minds?

Any thoughts and opinions welcome!

Sorry this is so long.

you may save £500 per month but you would be throwing money away renting. at least if you didnt sell you would be paying money off your mortgage. personally i would spend the next eighteen months being very careful with my money, even if it meant staying in all the time, and using the extra money i saved to reduce the amount of my debts that way. also would you actually save the £500 or would you end up spending it on every day expenses, i know i would. the extra morning coffee here, the new item of clothing there, going out because you have the money in the bank.

I would sell - we sold a year before we moved abroad and I would not have wanted the stress of a pending house sale as well as everything involved in moving abroad.

If you are already committed to moving and HAVE to sell it is more likely you will end up accepting a lower price because of the pressure.

If you put your flat on the market now you can hold out for a good price.

I kind of agree countydurhamlass - I guess I need a crystal ball, do we sell now and put the money in the bank or do we wait and see if house prices improve even slightly?

We are on a tight budget as it is. We don't go out much. I am hoping if we have a nice amount in the bank I will be inspired to add to it - the more money we have to take with us the better! We have been sticking to a good budget for a while now, I hope we could stick to it and save any spare. We don't really go without but our lives don't revolve around an expensive lifestyle i.e no overseas holidays, budget clothing etc etc.

ib good point. We don't want to be in a position where someone senses our desperation which would be quite evident - two bed flat with hopefully two young children. If we put on the market now we can hold out for the right price - there is no real pressure. I am liking the idea more and more. I don't want the hassle of selling a flat which can be stressful enough, let alone adding the stress of trying to move to a different country.

We do have to sell. We need the money for deposit on another house. It would be nigh on impossible to rent our flat (no-one really in London to manage it for us) and if we decide to sell I really don't want to have to do it from the other side of the world.

We are committed in that we both know we want to go, but it is quite scary thinking this far ahead. I have been homesick for soooo long, now taking some action feels quite BIG!

Need more info about your debts - apart from the mortgage, what are they? Roughly - how much?

Before you sell up to pay off debts, you need to think about how you'll budget so you don't get into debt again - but this time without a big asset to fall back on.

Bloody hell just lost my last response!

Debts around £20,000, we pay all up just under £1000 out each month paying debts off. Some paying actual amount off, some just making minimum payments. It is not just a case of getting into debt, there is a reason why we are in this mess. We have confronted the problem and are slowly getting back on our feet financially. I don't want to go into too many details as it is very personal information.

So if debts were paid off we would actually have in the region of £1000 more per month, however as we plan to leave whilst I am on maternity leave then I will not be entitled to maternity pay. £500 would cover my lost salary as we would no longer need childcare.

I guess the real issue is whether the property market is going to perk up in the next year or so. We of course have a price in mind for our flat, depends if someone is willing to pay that.

We hope to make in the region of £40,000 on the flat - we got flat at very good price! £20,000 pay off debts, rest in savings and add to that as much as possible to take with us.

This of course is all in theory....

I would sell. Whilst you have such large outstanding debts paying down the mortgage isn't actually making a bit dent in your overall debt. You reduce your debt, you can hold out for a better price for the house and you avoid the stress of selling with two small children and as part of a move abroad.

There are costs, however - two lots of removal fees, admin costs of renting, etc. But you will be debt free, as long as you're sure you wouldn't slip back into bad old habits. The goal of having as big a deposit as possible for a place in your home country should be a good motivator!

Good luck with whatever you decide to do.

A bit off topic, but you mention as not going back to work after maternity leave, you wouldn't be entitled to mat pay. You know that you accrue annual leave whilst on mat leave? I don't know how good your maternity pay package is in your job (whether just basic or enhanced), but if your maternity pay would be a substantial help, then perhaps consider going back for the minimum term after baby number 2?

I work in the NHS and we are only obliged to go back for 3 months after mat leave in order to be entitled to the full mat pay. I get over 30 days annual leave a year.

If for instance take a year's mat leave and go back for 3 months, would still have 30 + 7.5 + any bank holidays during mat leave to take as leave, which would mean you would only have to actually work about a month of your 3 month period you returned for. You can do this in one block or maybe spread over the 2/3 months as part time.

Just a thought depending how worth it for your job.