06, June, 2023

Should I sell my house to pay off debt?

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Should I sell my house to pay off debt?

Depending on the amount of debt you have you can consider selling your house. If your debt isn’t that high, you may be able to manage by reassessing your finances first. If you’re in deep debt and cannot pay your mortgage, selling your house may be a better path for you.

Across the UK, millions of people have some sort of debt attached to them. Whether it’s student debt, credit card debts, loans or a mortgage, most homeowners have either had some debt or still do. Dealing with debt can be tricky depending on how much you owe, and more homeowners who are getting deeper in debt are asking the question – should I sell my house to pay off my debt? We Buy Any House are here to reassure you and give you some answers.

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Should I sell my house to get out of debt?

Selling your house to pay off debt is often a last resort, but will ultimately depend on the situation that you’re in. If you’re struggling to keep on top of your mortgage payments along with other debt and outgoing costs, you may want to consider selling your house. If, however, you’re struggling with smaller debts, such as credit cards or loans, there are plenty of steps that you can take before you look at selling your house.

What can I do to help ease my debt?

The first thing that you should do is spend some time working out your income and your outgoings. Make yourself a spreadsheet that outlines the households’ income each month, and then the necessary outgoings. This can include your mortgage payments, credit card or loan payments, insurance, bills, and costs such as food and petrol for the car. After you’ve done this, work out what you pay each month on unnecessary items. This can include shopping for new clothes, online subscriptions, takeaways and nights out. Often, these costs are much higher than we realise, and controlling these can give more leeway to pay other debt.

For a few months, log every payment that you make into this spreadsheet. After you’ve got this data, you can look at the results and see where you can potentially cut costs. Reduce your nights out from once a week to once a month or switch to cheaper brands for the weekly food shop. This can make a big difference and help you get back on track to pay off your debts.

Can this help me clear my debt?

If your debt isn’t too high, this method can absolutely help you get on top of it. Living more frugally will mean you’ve got extra funds, which you could even use to make higher payments and have the debt paid off early. You’ll need to check with your lender, but lots of credit card lenders or loan lenders will allow you to make over-payments and let you pay off your debt early; this will usually mean that you save a little on the interest as well, and can reduce the full amount that you have to pay back.

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Should I get a consolidation loan?

If you’re struggling to pay your mortgage, the last thing that you want to do is get deeper in debt. Consolidation loans can sometimes be suitable for those who have several small loans and would prefer to group them together to have one larger payment each month but should be considered fully before doing so. If you’re struggling with debt, you can get free advice and support from the Money Advice Service, who will be able to help you assess your finances and look at a solution. For more extreme cases, a debt management plan can be really beneficial and allow you to deal with your debt face on. There is plenty of help that you can get, and should absolutely do so if you’re struggling with debt.

What if I’m in extreme debt?

If you’re in much deeper debt, there are still other options that you can explore before you look at selling your house. For example, if you’ve recently lost your job or have become ill and have fallen behind on your mortgage payments, you can contact your lender and look at switching to interest-only payments, or freeze them for a few months until you get back on your feet. Many homeowners are embarrassed and don’t want to talk to their lender about money troubles, but it’s the best thing to do. If you’re honest and upfront with them, they’re likely to help you find a solution to your issue, rather than resort to the repossession process. Taking control of your debt is always the best way to deal with it and will allow you to improve the situation rather than dwell in debt.

I can’t pay my mortgage and have other debt, what do I do?

Selling your house should be the last resort to solving your debt, but sometimes it’s the right decision depending on your situation. Circumstances change and can leave you in a difficult spot, unable to pay the mortgage and not knowing what to do next. Selling the house yourself rather than waiting until you’re repossessed means that you stay in control, and will be hugely beneficial to you. Being repossessed will do irreversible damage to your credit score and will make securing a mortgage elsewhere down the line incredibly hard.

Choosing to sell the house on your own terms will mean you avoid repossession and will likely get a better price for your house, giving you more opportunities for the future. If your house is repossessed, your lender will most likely sell your house in an auction which will usually result in a lower sale price. Selling yourself means you can get a better price and use the extra money to potentially buy yourself a smaller house somewhere else where you can manage the mortgage payments, or if you have other debts use it to clear everything and have a fresh start.

Dealing with your debt can be hard, but will make your situation much easier and allow you to get out from under the cloud and move on. If you have been thinking about selling your house to get out of debt and want more information, get in touch with us today. We can arrange a call with our property consultants and get you a free offer to see how we can help.

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