Would you sell your house to pay debts?

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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?

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.

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

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

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

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).

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.

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.

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.

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.

Could you do an equity release from the house?

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

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.

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

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.

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.

No.

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

(Sorry if this has been mentioned already)

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)

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

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

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.

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

grim ^

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

Bizarre advice on here. Are you all on glue?