Mortgage v rent v debt wwyd?

[EsmeWeatherwax]

Hiya, I know this has probably done before. But here goes. We have about 30k unsecured debt. We have around 32k equity in our house. We are managing slightly over minimum payments on two credit cards, rest on loans. Do we sit tight, bearing in mind largest loan is paid off in two years, or do we sell up, and rent for a couple of years whilst trying to save up a deposit to buy again. Our house is very small two bed, we have three kids. Rents are reasonably affordable here. I.e.1k per month will get you a large 4 bed in a good area. 1k is also considerably less than out current debt payments! Wwyd?

Depends where you live. You could find yourself priced out of the area you currently live very quickly if you're in London/some places in the south east

Don't get rid of your house.

If you are paying credit cards make sure you shift the balance to a 0% interest card or if you can't do that, can you get a loan to consolidate all of your debt into one place, ideally on a lower interest rate? Pay it off at an affordable pace.

Lock down the cards (as per my spreadsheets)
the debt will be gone in three years
lock down the mortgage and start overpaying as soon as you can

use that equity and any other you can put together to extend the house
or move once you are debt free

stamp duty, legal fees and moving costs will eat into your money PDQ

Lord no, I live in the west of Scotland. House prices not out of control here. Talkinpeace, what do you mean by lock down cards etc? What spreadsheet? Sorry, new to debt boards.

Esme
the thread with the spreadsheets on ....
www.mumsnet.com/Talk/legal_money_matters/1987219-SPREADSHEETS-for-Debt-Control-Budgeting-Mortgages-etc

When was the last time you private rented? Because right now, it's SHIT. There is NO way I'd sell a house to go and rent.

I'm of the opposite opinion. If your current house is too small, and you have a chance to clear your debt and rent somewhere of a more suitable size, then in your shoes I'd sell up and rent. Buy something else in a couple of years when you're ready, and don't believe the hype that prices are about to spiral out of reach.

Esme I am in the same situation. We have been paying off our debt for a while. My worry would be if you sold your house, will you ever get enough money together to buy a house again, bearing in mind how much deposit the banks want these days? If you rent all your lives, you won't have any equity to fall back on when you retire.

I agree, try and freeze interest/consolidate your debt so that you don't have too high interest charges.

Sit tight. If you sell you are unlikely to be able to save enough for deposit and fees

Plus then renting will pay someone else's mortgage - better to pay yours and have a house at the end of it

Can you remortgage to absorb some of the debt

Or consolidate all debts to one payment. Pay more then the min on credit cards

I laugh every time I read somebody opining that by renting you are 'paying somebody else's mortgage'.

What would you have the landlord do? Let you live in the house for free?

Course not

Renting is dead money so if the op has a house then I would do everything I could to keep it rather then sell and then rent

I have lots of friends who rent and pay much more then what they would if had a mortgage - but banks say they don't earn enough to get a mortgage yet they manage to pay £1000 rent every month but a mortgage would be £850 - yet banks say no

Tbh if I hadn't brought my 3 bed house 15yrs ago I wouldn't be able to buy a place now unless a 1 bed flat

Again of I came into money I would buy property and rent it

Renting is not 'dead money'. I can't believe how often I hear people parroting this phrase. You have to live somewhere. Renting buys you freedom; you may not do it forever, but you can move out at short notice and bug when it suits you.

Buying an overvalued house that you can't afford when the Bank of England base rate returns to normal levels, and which goes into negative equity when the market falters...now THAT is dead money.

BUY when it suits you!

One thought - right now your debts are forcing you to save ie to pay them off. Once they are gone you will have assets of £32k.

If you sell the house and pay off the debts you will have £2k (less estate agents fees, solicitor fees, moving costs etc). Being realistic how long will it take you to save up another £30k (plus estate......) if you are not being forced to?

On the other hand - if you are paying a ton in interest on your cards then you may be better to sell the house and use the interest money as savings.