I wonder if anyone could give advice that I could pass on to my friend? She has a huge amount of pressure on her from all directions and for all sorts of reasons, financial, with work, family troubles etc. I really want to help her any way I can and I'm not sure she is making the right decisions around her finances because of how stressed she is with other things.
She has a mortgage on her house, but cannot afford the monthly repayments and has debts that take up a huge chunk of her monthly outgoings. Once all bills and mortgage are paid she cannot afford food for her and her family.
It's very important to her to keep the house as she sees it as inheritance for her children in the future and would see it as a sign of failure and wasted years paying the mortgage if she were to sell and go into rented. She is however experiencing awful problems with an abusive neighbour, the house is in some level of disrepair as she doesn't have the money to maintain it, and as I said before the cost of the mortgage, on top of the debts is too much. If she sells her house she won't get another mortgage as her credit score is bad.
Would it make sense for my friend to sell up, pay off the debts, rent for a while and once she has recovered from this stressful time in her life, look at improving her credit score and potentially buying again in the future? She would have at least £100k in equity, could she put some of this in savings for the children's futures? She currently gets tax credits, so this would obviously stop if she had that level of savings, but then couldn't she use the equity to go towards her monthly outgoings in the short /medium term until she gets back on her feet and finds better employment? To me a lot of this makes sense, but my friend is so fragile at the moment I don't want to give her this advice if there are in fact loads of holes in it. Maybe I'm not seeing the full picture here. Does it seem like a reasonable suggestion? Thanks.