Mortgage / debt dilemma

[Richie88]

I need some advice about what do and which option is best. I currently own a 2 bedroom flat that I could for about £190k. The mortgage I owe on it is £115,0000. I want to sell it and buy a bigger house but also owe £29k in debt. If I sold the flat after paying agents, solicitors and clearing the mortgage I would have in the region of £72000. take away debts would leave £43k. One of these debts has a ccj against it.

So now I am completely debt free with the ccj paid and satisfied (another 3 years of the 6 is stays on your credit file) and have £43000 in my bank, I am planning to buy a property in about a year after saving maybe another £15k so will have around 60k for a deposit for a house and have no debt with a satisfied ccj. Is the scenario I just explained better than remortgaging to pay off all the debt (still debt free apart from mortgage) then trying to port my mortgage across to try and get a bigger house? Please let me know what you think

[themas]

With your first option, where would you live for the year? If you would have to rent, have you factored that cost into your calculations?

With either option you might have problems getting a mortgage/remortgage due to the ccj. My gut feel is it would probably be best to go for the second option if you are able to remortgage at a reasonable rate - but make sure you get a portable one.

However, there are so many variables here that you will never know whether whatever you do is the better option.

[ladybirder]

With that amount of debt and a CCJ I doubt you would be able to remortgage especially in today's financial climate.

[pretty_snowdrop]

I would carry on and live in your flat for another 3 years if thats an option. While doing this you are reducing your original mortgage debt and you can hopefully still save the 15k a year if you want to ( i presume if you sold it you would have to rent). After the 3 years your ccj won't be showing on your file so you won't have any problems getting a mtg with a god rate ( banks won't touch you now with a ccj) and you will have saved 45k.

[Richie88]

I have the option of living at my parents with no rent to pay while I do this. Taking this into account would option 1 be best?

[themas]

So much depends on your circumstances that it is difficult to do anything other than point out some possible implications. Obviously, if you can live rent free you can save more money & that will help you when you eventually want to buy again. But you could find yourself stuck, unable to get another mortgage at an acceptable rate & living with parents far longer than you (or they?!!) wish.

If you try to mortgage again in a year's time the ccj (although satisfied) will still be on your CRA file - & there may also be adverse info. about the other debts if you have fallen behind with payments on them. This could well make getting a mortgage more difficult - particularly if the mortgage market remains as tight as it is at present.

The same would very likely apply if you try to re-mortgage now, but it may depend on who your mortgage is with & what their attitude is to what you are trying to do.

Before you make a decision it might be a good idea to explore with your mortgage lender (&/or a mortgage broker) the likelihood of getting a re-mortgage & what interest rate would be charged. If the result is adverse your decision is made for you; if positive you can still decide to adopt option 1 if you wish.