We’re fed up with high mortgage costs – which is the best way to pay off the debts?

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Q We’re fed up with high mortgage costs and would like to pay off our debts and the sooner the better. We are happy to downsize and simplify our life to make this possible.

We have two properties, one flat without a mortgage which is valued at £43,500. We are not able to live in this property due to its location, in a different town, too far from our jobs. It also needs some renovating.

The other property, which is where we live, has a mortgage and is valued at £174,000. We still have about £73,000 to pay off.

What is the best course of action? Sell both properties and try to find a cheaper property with the proceeds? Or sell the least valuable property and put the money towards reducing the mortgage? RB

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A If you sold both properties, you would be mortgage free and have just over £142,000 (after paying off your current mortgage and assuming you paid estate agents’ fees of 1% plus VAT). You may also need to pay stamp duty, and will face conveyancing costs, and the other fees associated with buying.

So my question to you is: would this be enough to buy a property in an area that you would be happy living in? And do you have the money to pay those costs on top? If the answers are no, you would need to top up the £142,000 with another mortgage to be able to buy a suitable home, and I’d be tempted to go with your second option.

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Selling the flat in its current state would give just under £43,000 (after estate agents’ fees) so you could bring the mortgage on the house you live in down to just under £29,900. What I wouldn’t do is spend money renovating the flat before selling it unless an estate agent tells you that the work is necessary to make the flat sellable.

If you do decide to sell the flat and reduce your mortgage with the proceeds, it would also make sense to see if you can reduce your mortgage costs even more by re-mortgaging to a different lender. It’s also worth asking your current lender is they can offer you a better deal – especially as your mortgage would represent less than 20% of the value of your home.

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