Sell house and eventually get council house?

[SheilaMorrissey]

I need to sell my house and clear my mortgage. I've only been paying interest for the last few years due to the death of my husband (our mortgage protection insurance had lapsed 12 months prior to his death due to financial chaos and utter stupidity on our parts) and the loss of 1.5 incomes i.e. the loss of his income + a huge reduction in my own income as I became a single parent overnight and had to devote the majority of my time to raising three grieving kids. I am also struggling to pay off personal loans from way back. As I've been paying vastly reduced amounts, the interest is killing me.

Ultimately, I am exhausted physically and mentally and now that the kids are older and almost all independent, I need to get out from under this debt and sort it out and start again. So I'm planning to sell my house which has been valued at 360k, clear the balance of the mortgage plus arrears (180k), clear all personal loans (30k) and be shut of all debt and all financial obligations.

Needless to say, I have not included all reasons for my situation but, in brief, the priority when my husband died was to a) look after my distraught kids (including one with serious mental health issues) and, b) keep a roof over our heads through any means possible.

I know many would say that it's crazy to part with the family home but I know I will never get out of this poverty trap if I just keep paying mininum amounts and not tackling the principal debts. It's been years of poverty and sleepless nights and not being able to afford even the basics, never mind luxuries like holidays or clothes etc. I'm sick of being poor and I'm sick of being stressed and ashamed and feeling like a loser.

After paying debts + auctioneer costs + conveyancing etc I should be left with approximately 130k. I thought of buying a small run down place that I could renovate bit by bit over time. I don't mean somewhere with the roof falling off - I mean somewhere neglected and shabby but fundamentally okay.

Or would it be best to put my name on the council list and rent until a place comes up?

I am exhausted. No judgement please.

P.S. I have spoken to the bank about recapitalising the mortgage but even if they say yes, it would mean a mortage of 1,500k a month until I'm 70. I can't afford that. I'm earning (including widows pension) 2,200 a month.

P.P.S My credit rating is shot to hell. I haven't abandoned any loans or debts, I've simply paid off a lot less per week/month than I should have. I'm not trying to get out of paying what I owe.

 

[Brendan Burgess]

Or would it be best to put my name on the council list and rent until a place comes up?

How long do you think it will take for a place to come up?
I doubt that they will give you a place if you have recently sold a house.
So you would use up all your savings in rent in the meantime.

What ages are the children? Will they be earning soon and could they contribute to the mortgage?

It might be best to do a Moneymakeover

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There may be other solutions.

Brendan

 

[misemoi]

I am sorry for your loss.

Have you ever investigated whether the protection policy would have paid out prior to your husband's passing, e.g on confirmation of a terminal illness? There may be circumstances in which it was due before it lapsed, it is worth ruling this out if you have not already. I feel like there should be safeguarding around situations like this as dealing with a serious illness or sudden death is already stressful enough and the insurance companies should do more than just allow policies to lapse. In these cases they are dealing with very vulnerable people.

 

[Sue Ellen]

I doubt that they will give you a place if you have recently sold a house.

Hi Sheila,

Very sorry to hear of your husband's death and the extremely tough time that you have been through since. You have done very well to hold things together in light of all you have gone through, so fair dues.

I think Brendan is right in recommending that you complete the Money Makeover to see what avenues are open to you with advice from contributors on AAM. As you say you are exhausted mentally and physically so you may not have the energy at the moment to think things through thoroughly.

With regard to the Council house option with waiting lists as long as they are it would most likely take many years and your children may have moved on. You would, therefore, maybe be only offered a one bedroom flat if you were living on your own at that stage.

Hope things work out for you and that you stay healthy.

S.E.

 

[DannyBoyD]

Very unlikely you will be prioritised for State housing.

Having made it this far, it would be a shame to lose it now.

The fact that you are in positive equity is a major plus. I would view the interest only as effectively the same as paying rent. The difference being that, all things being equal, you have the opportunity of getting your money back. So if you can stay on Interest only for now, I'd take that anyday over waiting for State housing.

I agree the full Money Makeover is the way to go.

There's lots of other things to take into account as well.

Its hard not to feel despair; but you've got this far & you are clearly made of strong stuff.