Should we sell our house to pay off our debts?

[wheredidallthemoneygo]

DH and I have had a tough three years financially with a number of unexpected events hitting us in quick succession, and have gone from having plenty of disposable income and not many money worries, to being completely crippled by debt. We are at the point where our incomings just about cover our basic outgoings, but anything out of the ordinary is going straight on our credit cards and we're just about keeping up with our repayments.

Some of this is short/medium term - I have a loan that I will finish paying in 2 months time which will free up £325 per month, and DH also has a loan which will be repaid in around 8 or 9 months which is £300 per month. Our youngest has just turned 2 and is in full time childcare, so in about a year's time our childcare costs for her will significantly decrease.

But at the moment, the stress of having no money is really getting to me. My sister is getting married and had her hen do this weekend in Barcelona. I really couldn't afford to go, but as her maid of honour there were no excuses I could give so I had to put the lot on my credit card. I am also going to the US for a conference with work next week. This will be really beneficial for my job but will mean extra childcare costs while I'm away, plus I will have to incur my expenses up front and then claim them back next month. I honestly don't know how we are going to make ends meet without racking up even more debt and it is keeping me awake at night worrying about it.

I think we have two options - either sit it out, keep paying the minimum amounts back on our cards until some time in the next 12/18 months when we have more spare cash to throw at the debt, or we put our house on the market, try and sell up and move somewhere cheaper. We have a reasonable amount of equity in the property so could probably half our monthly mortgage costs and pay off a good bit of the debt. I am inclined to go with this latter option as I feel it is likely to get us out of this hole faster, but DH thinks it is a bit extreme and that we just need to push on through for a bit. Anyone got any advice on which option they think is best, or a magical third option that we haven't considered yet?

In 2 months things ease up when the loan is paid off and then again in 8 months time.
Can you make it through till then?

Buying and selling costs a lot so you may not make as much money out of it, as you expect.

I would not sell to pay off debts unless there was far cheaper housing available and no other choices.

Push on through if you possibly can. Think of all the money you'd spend on eg legal bills etc if you sold up and bought again.

Can you switch to interest only for a few months on your mortgage?

Also your sister should have been told that you could not afford to go. That was not an excuse but the truth. You need to live within your means even if it means missing out. In a few months things will change.

Put the work expenses on credit card but make sure you pay them off when your claim is paid. Or talk to your work to see if they will sort out these expenses in some other way.

Can either of you take on any extra work? It sounds as if just £100 extra a week would make a difference and moving is really stressful and expensive.

I wouldn’t sell up to pay off debt. Could you change your mortgage? For example re mortgage and increase the term for a fixed period to reduce payments and help get you out of some debt, the re mortgage and overpay to reduce term once you’ve stabilised?

I would try and push through unless you have a house thats hard to upkeep and will get into debt over again

I don't see why you are going to Barcelona.

How much is the debt relative to the amount of equity in your property?

What sort of costs would you incur by moving (stamp duty, mortgage arrangement fees etc).

How has the debt arisen, from something significant that's likely to reoccur or a gradual build up from outgoings being greater than income?

I really couldn't afford to go, but as her maid of honour there were no excuses I could give so I had to put the lot on my credit card.

You need to get out of this mindset if you are to climb out of debt

I wouldnt as the costs of selling and buying can quickly add up & you could end up worse off in the long run.
I would look into getting a 0% credit card and work out a monthly budget to try get back on track.

Its time consuming but worth going through all your utilities and see if you can get better deals.
Could you see if there are any ways you could make money to try and reduce the debt eg sell out toys/ clothes, rent a room out in your house etc.

Can you remortgage to release equity to pay off the debt ? Get yourself sorted and when childcare costs finish make overpayments on the mortgage to get it back down ?
Or in two months when your loan finishes use the money to double pay your husbands and get that paid off in 5 months instead of 8.

Hope you manage to find a solution it’s a horrible situation but I do think selling should be last resort x

Have cut costs everywhere you can? Do you use tax-free childcare? Cancelled Prime/Netlix/Sky etc. Shopped around for all bills/insurances. Gone down to one car if possible. Sold old stuff on. Swapped to cheaper supermarket? This could get you through a few months until some of your loans are paid off.

Contact CAP for advice about consolidating your debts. Your monthly repayments could end up small enough to make it far easier to cope until nursery fees decrease.

Also look into the other ways of budgeting and reducing spending. Money Saving Expert is excellent.

God no. hang on to your home till there is no other option, even time. And you have time as an option now.
Sit tight and keep on pushing through.
It's nearly spring, by early summer things will be a little better, then double down on clearing your dh's debt. By autumn you'll be in a much better position.
This too shall pass.

Don't do it! You'll just be throwing money away on estate agents, solicitors and stamp duty. Grit your teeth and look for every conceivable way to save money, reduce your debts that you can. It's only a few months.

I really couldn't afford to go, but as her maid of honour there were no excuses I could give so I had to put the lot on my credit card

There didn't need to be excuses but the REASON should've been that you couldn't afford to go. There's nothing wrong with saying that and especially to your sister.

To answer your OP, hang on and cut unnecessary outgoings.

I'd switch my mortgage to interest only for 6 months. Most providers do this

Hmm - usually I would say “no” but you sound out of your depth. What are the numbers we are talking about in terms of house value/debts/equity?

Personally I would rather downsize and live within my means.

No, don't sell up.
And cancel Barcelona if possible.

I'd wait it out I think-but don't get sucked into doing what you can't afford any more!

I assume that no one can help with childcare & your husband can't take time off?

Spare room to rent out?

I don’t know why everyone is encouraging you to stay, if you could pay off a lot of this debt and halve your mortgage costs: you sound really over-extended.

Don’t do it OP!! Just wait it out! As you say in a few months things will ease up!! If you sell your house you may never get back on the housing market... then you are faced with instability and high rents possibly!!

Can you release some equity by doing a Further Advance on your mortgage?