If you’ve found yourself in debt to an unmanageable level, you’ve no doubt tried a myriad of things to make your situation better.
You might have cut right back on non-essentials or take on a few extra shifts, but it hasn’t worked, and you’re tearing your hair out to think of a solution.
Have you thought about selling your home? Selling your home to clear your debts doesn’t always make sense, but when it does, it can really dig your out of a hole, so when might it be a good idea to sell your home and pay off your debts?
When Your Mortgage is Far Too Big
Some would argue that the only time it makes sense to sell off your home in order to clear your debts is when your mortgage is far too big for you to manage. By big, I mean when your mortgage is sucking up so much of your salary that you barely have enough cash left to pay the bills to let alone put a dent in your debt.
Ideally, your mortgage should not be taking up more than one-quarter of your monthly debt, and it, if is downsizing, might be the only way to get you out of the bind you’re in.
It might not be an easy decision to make, especially if you consider this to be your dream home, but what’s the point of having a beautiful house, when you have no money to feed your family, and you’re declared bankrupt?
If you’re an older, retired person and you’re struggling under the burden of debt, you may be able to sell your home to an equity release company, who will buy your home from you, while still allowing you to live there for the rest of your life.
Depending on the deal, you may or may not have to pay rent, and you will always have to hand over your property upon death, but it’s a solid option when you really need the money.
You’re Thinking of Moving Anyway
If you’ve been thinking about moving to another area anyway, then it absolutely does make sense to sell your home and use the cash to clear your debt.
It won’t feel like such of a hardship having to downsize when you were planning to start somewhere else anyway. It’ll certainly be a lot easier than having to move out of a dream house to clear debt!
Is It Worth It?
However, before you jump in and list your property with Realty Group, take some time to do the math. In any of the above situations, you need to work out whether selling your home will actually lead to you being all that better off at all.
For example, will you have enough money left over after paying off the mortgage and clearing your debts, to start again somewhere new, or will you be left with so little equity that putting a deposit on a new home or making rent at a new place will leave you struggling again? If not, it probably isn’t worth selling up for the sake of becoming debt free.
So have you considered the idea of selling your home off to clear your debts? I know I have but I’ve never been able to move forward with it for a lot of different reasons personally. However, if you are I would love to hear your thoughts and comments below.