Stepping Off the ladder

[mrmagoo2516]

Hello all,
Would very much welcome views on my stepping off the property ladder. I want to sell my house and go back to renting. Separated from wife amicably 6 mths ago and have my kids one weeknight and all weekend every weekend. I only have a 20k stake on house witha 105k mortgage, and am living moth to month with no savings. If boiler or car packs up cannot replace. I have 10k of personal debt which was my half of the debt from our marriage. Am paying this via debt management plan through charity

Put simply I cannot face living like this - no savings- no holidays- no travel. I want to sell house-get my 20k pay 10k debt off-have months salary in savings-and have the rest as a travel fund for me and kids (will buy me air tickets once a year for six years).

I can rent for 80 more a month than am paying in mortgage payments-but will have no debt-will have savings-and can travel. Fortunately my ex wifes family have money and my children will inherit quite a lot in their middle age-whereas I am from a poor family-no inheritance at all. So kids will get money in their 30s or 40s, but will get to travel with me in their childhood (aged 12 and 10 now).

I am concerned that if interest rates rise my mortgage of 550 pm will become unaffordable-then will default and get repossessed-they will sell my house at knock down price- and I end up in a load of debt.

If I get out now- I end up with no debt-savings-and can travel?

Seems no brainer-am I missing something?

The only problem I can see is that your renting costs are higher than your mortgage. Is there no way you can find a cheaper rental?

BTW, I agree that those precious holiday memories with your kids will be worth having.

Hi yes they are-for now-whilst interest rates are low-but when in rented I wont have any debts (currently will take 9 years to repay at 85 a month !) and will not feel sick if I see a damp patch appear on the wall or a roof tile falls off!

I seem to have a tenuous (15%) grip on this house- I am 46, and my mortgage will run until I am 70...I also- due to having a debt management plan-have a credit rating of zero-so if my car breaks I cannot get a loan for a new one.

I have a real sense that I will be repossessed in next 5 years-so may as well get out now. I will then have no debt-will have some money-but will be able to move when I like, and not have to do DIY evry time something goes wrong. I guess we are so obssessed with ownership in this country that I am twittering about on what seems such a straightforward move for my circumstances? Or am I ?!

Sounds like decision made

I know a couple who did this and found that their rent went up much, much faster than they imagined and are now struggling. Do you think think that you can rent for a while and perhaps save for a small flat when your children are older and no longer need to visit every weekend?

Personally in your situation I'd sell up & rent. Your children are still relatively young & agree that memories are precious. Kids don't need or want stressed out parents...

I think deep down you know exactly what to do, go with that

How many rooms have you got in the house? Could you take in a lodger to pay the bills?

Not saying you shouldn't sell up btw! Just exploring possibilities ...

I was going to suggest the lodger idea too. How big is the house you are in now?

If you were to sell up, what would happen to the debt management plan? Would you pay it all off straightaway?

If I were in your position I would get down to a CAB or similar and get some financial advice. It could be that even if you pay off your your debt management plan with your windfall, your credit rating will take years to recover - I am not trying to be negative, but it would be best to do whatever you decide on doing with your eyes wide open.

Also, how much of the expected equity from the house sale will be

THere are lots of benefits to renting, having said this. And like other posters I don't think it's worth just hanging on to your property if it means you can't ever go anywhere or have breaks - that will be miserable and you are right, if interest rates go up then you could be scuppered as I'd imagine that having a DMP will mean you can't shop around for a better deal.

How much of the expected equity from the house sale will disappear in solicitors' fees.... dunno what happened to the end of that sentence.

Thanks for all replies-
There are only three bedrooms-need two for kids as boy and girl. Yes would pay off all debts immediately-also resigned to estate agents fees- if kids would not inherit through their mum I would be thinking a lot harder about this but....

My credit rating is already shot for 6 years anyway...at least if I sell up I can live within my means and have some savings and travel.....but hey, some people have to walk to get water in the morning.....! At least I am not miserably bound to someone through debt.

Many thanks for replies-very kind to take the time, but having perused some economic websites this evening-with strong predictions for interest rate hikes in Q4 13-14 and throughout 2014.....Don't think we will see the 14.6% mortgage rates we saw in 1992..but it only needs to raise another 2% and I am knackered.

Looks like its backpacking in Greece with kids this summer....!

Go for it then - seems like a good solution for you. JUst don't blow it all on holidays (voice of doom here ) and keep a little for a rainy day.... Here's to being debt-free, though.

mrmagoo if you want to avoid estate agents fees, perhaps consider an online agent such as House Network.

We sold our flat through them, it cost £600 (incl VAT) rather than the £5K + VAT we would have spent on agents fees.

I may spend it all on cake, never mind holidays....no, I promise shall be careful.........

1/ you don't need to travel to create special childhood memories for your kids to look back on

2/ travel is more mentioned than your huge debt, leaving me to wonder how you got to this point and whether or not you will just repeat it after a clean slate. Are you spending beyond what you're earning too often?

3/ Why do you think the kids will inherit anything? I'm assuming this is from their grandparents. Both sets if grandparents may need to sell / use their savings if they get ill. If they live in UK, get dementia or Alzheimer's, and need partial or full time care because they can't live independently, they will have to sell their property/use saving to pay themselves. NHS won't cover that. Those types of places start at £1000/week! Bottom line - you can't count on your children inheriting anything.

Cosmosim summed up my questions. I suspect there are lifestyle / spending issues to sort before anything else or history will repeat itself.

Hi.
No lifestyle issues anymore. I am afraid that came from staying with someone 'for the kids', and spending money we did not have in order to distract away from problems. You know, the couple that goes on holiday but sits at dinner tables looking away from each other at forty five degrees.....

Since separating have got into freecycling, make do and mend, skip rummaging etc. No more debt..no more 'treating ' myself with products, or seeing shopping as a valid leisure activity.

I spent from 17 to 27 travelling around the world working, and found that travelling just...you know...made me less frightened of people...less frightened about people who lived differently than me, or wanted to take decisions that were not in concordance with my expectations. I want a small part of that for my kids as part of their emotional development. I have already made them sit through Annie Leonards 'Story of Stuff'...they were shocked but loved it. Thats why I talk about travel more than debt/money.

I know it is not certain that my kids will inherit. I mention it as the prospect of inheritence is often a common sense factor in taking these decisions. If they go to Uni (if), they will hit the ground at least 59k in debt afterward......

Oh well, the poor boys in the city do appear to have run out of poker chips and are now rummaging through everyone pensions and encouraging more debt..whilst encouraging everyone to blame everyone else......single mums, benefit claimants, asylum seekers...

I think I am going to step out of it really.....
Thanks for advice. Very gratefully recieved !! x