Sell.. Rent or Remortgage

[TeaPot40]

We have some large debts and we were planning on selling and renting for a while to clear the debts and then move forwards
However I worry that renting is risky now and it'd be better to remortgage. The equity in the house would pretty much clear all our debt and we'd be left with just the mortgage.
Its going round and round constantly day and night in my head and just need some other perspectives..
We got shat on massively which is why we have the debt and once it's gone we can afford all bills comfortably and lI've within our means.
It has just spiralled a bit
Thanks

I don't think anyone here is saying they are an expert, or if they are alarm bells should be ringing, because why would a real expert be giving out advice for free?! I think all posters on this board can/should expect is personal opinion and sharing of experiences (anecdata!). There is even a sticky to that effect on the top of the board! Obviously OP should consult a real-life expert rather than taking advice of anyone on here whatever their mathematical or fortune telling ability...

I’m not an expert - but the fact you think I’m the sort of person who borrows too much or is a sitting duck for equity release firms.

You're being very arse-y, Iam.
You said both renting and paying a mortgage are not an investment. I disagree; paying a mortgage means you own a house at the end. You invest in your own house.

And yes, there is still a property ladder. As you pay off a mortgage you may have more equity to fund a bigger house if that's what you want, and if you earn enough.

I don’t know why Iam is trying to push her opinion on everyone else. You’ve stated your point of view. If I was in op’s shoes, I wouldn’t sell because even if you sell and get as much equity as you’ll expect, most of the extra 10k would be swallowed up in moving costs, etc and then you’ll have to start saving for a new house and all the costs involved. This might take years. I’ll take the remortgage option here and try to overpay on the mortgage as much as I can.

Try to learn the difference between opinion and fact.

It is a fact that paying off a loan over 25 years, rather than four or five, costs more in interest.

It is a fact that paying rent is not ‘an investment’.

An investment is an asset bought to generate future income or capital growth. Your house might appreciate in value, or it might not, but you are paying your mortgage primarily to put a roof over your head. It’s not really an investment.

It must be terribly upsetting to have facts ‘pushed on you’ but I’m afraid that facts tend to outweigh ill-informed opinions.

Nobody (from what I can see) has disputed that paying off a loan over 25 years would be more than paying over 4 or 5. Quite obviously that would be the case.

What I am saying is though that 50k over 25 based on the current rates would be negligible and OP would still own a property at the end of it.

I take your point about a mortgage primarily being about a place to live - but for most there is an end game as well that certainly can be considered an investment.

Also various types of mortgage - a buy to let can almost be nothing but an investment.

Morning..
I'm sorry if I've caused disagreements but it's very interesting to read your opinions.
Whatever any of you say I will be getting proper advice and will not jump into anything.
I understand that owning your own house is the be all and end all for some people but I'm afraid I don't feel like that.
The house we live in is ok, but we do want to move at some point.
Pre debt we were stable and managing very nicely.. with the debt gone we will again be ok as we live within our means and will be able to save each month.
My question was if at this time when things are unstable ecomony wise would renting be a risk?
Our jobs are both secure and are at no risk.
Also I'm not panicked.. just so very sick of debt and the decisions of what to do going round and round.
If I take any emotion out of it and use my head it does seem quite clear now but again I will be getting proper advice

Morning OP - financial advice would be sensible.

Good luck with whatever route you go down.

Just to add also that our mortgage is below £150,000

emz771

Thank you

If it below 150k I would really try and hang on to it. That’s incredibly small - like others have said get advice but I really would try and keep it.

If she sells her house and saves for a deposit whilst renting then surely she will just be starting again with a high LTV anyway?

Personally I would get professional advice and would not rule out the likes of an IVA where you don't have to sell your home, you wouldn't be able to get credit but as you've said you intend to live within your means

Equity release is a bad idea, but presumably there are other ways to remortgage, or to get debt repayments down.
Glad you're going to get proper financial advice OP.
Renting is always insecure. You can be given notice at any time. Rent usually costs more than a mortgage. If anything you'd be better off buying somewhere cheaper, rather then renting.
Not a great time to be moving, selling anyway.

Pay down the debt. It won't take as a long as you think.

If you can pay it then it's your mind set about the debt that needs changing.

Move it around to be and to stay interest free or as low interest as possible and pay it down.

What's the point moving and no longer owning a house and then having savings?

Pay down the debt, stay put and save the costs of selling and moving and eventually you will be In a position to save again.

Even whilst paying down debt save a small amount a month as it all adds up and can be worth having an emergency fund even whilst in debt.

If you sold would you be in the position to save for another deposit?
X

why would a real expert be giving out advice for free?! I think all posters on this board can/should expect is personal opinion and sharing of experiences (anecdata!)

Some of us are here as we actually enjoy what we do and hope that sometimes we can help. The problem is often sorting the total rubbish (of which there is much), from the facts.

Agree with the poster above.
I'm very knowledgeable in my particular line of work and I often help for nothing because I'm a decent person who likes to help others
Appreciate everyone taking the time to put their comments forward
Wish me luck

Just to say we did this. Business failed and we hD to sell out house to pay the debts off.
If the debts get out of hand then a charging order can be put on the house anyway.

We sold, paid it off and are now renting. Feel stress free. We may/may not get our own house again but it's not the be all and end all.
We can save now which is a first so have some security that way!

Please go on to the Debt Free Wannabe section of Money Saving Expert. There are lots of specialist advisors on there. Also contact Stepchange.

I would advise against selling up unless you are young - lending criteria are changing and you may not be able to get back on the ladder again. If you rent you'll have to pay a deposit and moving costs and it might not be secure. Adding to the mortgage is a last resort but preferable to selling imo if you can be totally confident that you'd not run up debts again and can overpay the new mortgage.

Second the advice to look on the MSE debt forum. The first thing you need to do is put together a proper sustainable budget which may include some fun money and must include savings for annual and irregular expenses like insurance, car repairs, appliance replacement, Christmas etc.

www.moneysavingexpert.com/family/money-help/

Until you've done that OP, you can't make any decisions about selling and renting, formal debt solutions or just needing to trim your essential expenses a bit and focus on throwing most of your spare money at your debts.

It's probably not a good idea to sell and rent unless things are really desperate, but that depends on the rental market in your area, how much your mortgage is costing vs rent costs, eg in some parts of the country a mortgage is cheaper than rent, in others, it's the other way round. Plus how much interest you're paying on your mortgage each month, that's also dead money too.

I agree with Iamwombat that remortgaging or refinancing your existing mortgage to cash out equity to pay of the debts is a bad move financially.

However, there are other instruments you can use. A separate home equity loan can be taken out with a shorter pay off term of, say 5yrs, and usually at lower interest than an unsecured personal loan. Your payments are higher, but you avoid 20yrs of interest so end up paying less total money in repayments. There are also home equity lines of credit too which is an option.

Selling the house is also a valid option. Renting is perfectly fine way to live and gives you flexibility. Do you have DCs? Will you want to live near a better secondary school? Moving for things like jobs, education, etc are much easier if renting.

It depends really how much you like living in your house and the advantages of your location whether it’s better to sell or to use home equity to clear the debts.

We do have children and we are happy in our chosen area but we will need to move to a bigger house at some point.
I'm not against renting at all and in some ways it feels like it'd be a welcome change from all the jobs that we are constantly doing to this house which also cost money.. we won't make any decisions until we have spoken to someone who knows what's what but it's good to hear all your thoughts

Don’t underestimate the expense and hassle of suddenly having to move at short notice, of a landlord wants their property back.

Removals, storage, time off work, furniture that doesn’t fit in the new place (stuff like having to sell your American fridge freezer to buy a smaller one). It all adds up.

I didn’t buy until I was 30 and I had two children by then. Renting with a family was stressful and I would never voluntarily go back to it. It wasn’t even possible to decorate the children’s room in pastel paint or hang extra pictures or posters.

If you could predict all the costs and foresee house price trends, maybe you could do a proper cost comparison, but I don’t see how that’s possible.