Please can someone help, panicking so much about mortgage

Is there any way you could rent out a spare room? Im very lucky that the town i live in has a hospital, a large student population and language schools who are always looking for host families. Ive taken on short term lodgers for 2-3 weeks (language students), hospital staff who needed to live in my city for 6 months, and occasionally a uni student lodger.

Im in the SE (where rents are generally higher), but i think the going rate is around £800pcm including bills for a lodger. You could try this (start off with a short term lodger, to see if its something that can work for you).

What is your LTV-overpay now to try and tip you into the next bracket for more favourable loan rates?

I do empathise and understand! I’m sure there are lots of others in the same boat or similar situations.

I first bought a house in 2017 then the economy crashed. I then sold that eventually and rented for years and years. Managed to buy 3 years ago but that’s to Liz Tryss rates were sky high but I had no choice as landlord gave me 3 mths notice! Now we are due to have our 2 yesr fixed expire August 2027 too. It’s too early for a mortgage broker to search / lock in rates as can only do 6 mths. I’m really looking forward to the gas and electric going up 24% in Jan too as my fixed contact ends December!

There really is no need for that.

Just because other peoples positions are different doesn't mean the OP isn't allowed to stress out about her own position.

I want to read this through again in the morning after a couple of cups of coffee. Trying to decide what to do with my own Mortgage.🙇🏻‍♀️🙇🏻‍♀️

@Pancis125a few people have suggested looking at offset mortgages and what your childcare commitments are.

Go with a broker. Ours costs us £250 every 5 years and it’s a real investment in our finances. He’s found us some fantastic deals and we’ve saved way more than the £750 we’ve spent so far (3 x 5 year fixed mortgage deals)

I agree with this, I was a lone parent on a third of OP's salary with no child maintenance (don't get me started!) and struggle to see the hardship here.

I DO understand the panic though, it can get very overwhelming when you have to do it all on your own and it's easy to catastrophise.

Which is why OP needs to talk to a mortgage broker, not get financial advice from MN randoms...

Hi OP.
I don't have any advice but I'm in a very similar position, 5 year fixed term mortgage coming to and end next September.
Also on my own, already working 3 jobs and not a penny to spare each month.
I'm dreading it, I don't know where I'm supposed to magic this money from.
So no advice but absolutely you're not alone

I would look to downsize you could extend the term but that's adding more debt your 50 k I would try save some in case you need it in the future

Go to a broker. You will be able to sign up to a rate now, and it won't go up if the rate increases, but if it goes down between now and your renewal date they will be able to reduce it to the new offer.

It is impossible to know what the rate will be in a couple of years. If you can find a rate that will be affordable (even if tight) for you probably worth fixing at that for a longer period as if it goes up further you would be really stuck.

But if the new rate is really difficult for you to afford, a shorter period means you aren't tied in as long, but it is a bit of a gamble that you would get a lower rate at that renewal time. There is still over 2 more years of Trump so a lot of volatility still to come

With all due respect OP there are people (namely other lone parents - I am one) in much tighter situations than you.
Your £75k salary is high band and you have your child maintenance coming in from your ex no doubt too, and a nice fat £50k sum to fall back on.
I think you are being over dramatic about something which in the grand scheme, is just a first world problem.
You will manage. Be smart, and do your research.

Hi, we’ve just remortgaged and got a rate of 4.7% I believe. Please use an independent advisor for the best rate available to you.

I’d also use the £50k 59 pay the difference in mortgage each month but again an advisor could tell you what difference it would make if you were to use it to pay off a lump sum off the mortgage and whether that would be worth doing.

Might also be worth putting your dilemma in ChatGPT and asking it for advice.

I would seriously look at downsizing - scraping £100 here and there to help plus losing all of your savings sounds very very stressful and not a long term solution at all

You’re right I skimmed that part is as you say talking about the rate on reversion and how they can move, as you say has to legally be there (I still work in mortgages) and yup can confirm it’s on all ours too.

You're not falling behind now but you might do when rates increase.
Speak to Natwest now. The earlier you can plan the better.

Also get in touch with a recommended mortgage broker with whole of market access. They will discuss your options.

I do feel for you and the worst feeling is feeling scared about money worries.

A 280 mortgage is a lot on your own. What are your thoughts about downsizing? Or maybe moving to a cheaper area (not too far away so the impact on your child is minimal).

Good luck x

No it isn't the internal stress test, but people point the finger that they weren't told what it could go up to if rates increase, and they are. They legally have to be. I worked in mortgages until a year ago.

Also that isn't variable, it's a 3 part fixed rate mortgage (the parts aren't relevant for this topic). Near the bottom it tells you what you'd pay if the available rate at the end of your fix was 9%.

It is always worrying doing this stuff on your own, but based on a very rough “back of an envelope” calculation, I genuinely think you should be fine — even if rates are quite a bit higher next year.

First, this is almost a year away, so you’re thinking about it with loads of notice. Secondly, I think you’re actually in a much stronger position than you realise: you’ve got a very good salary, you’re already saving each month, and you’re in the fortunate position of having the £50k available if you need/want to use it against the mortgage.

Very roughly, from what you’ve told us:

1. Mortgage now = £280k at 2.7%, fixed until August 2027.
2. That’s about £630/month in interest. As you’re paying £1,000/month, roughly £370 is currently going towards the capital.
3. By next August you should therefore have knocked another c.£4,070 off the mortgage.
4. You’re also saving £350/month, so another c.£3,850 by then.
5. You think you’ll have another £100/month available next year, which gets you to about £1,450/month. And on a salary of nearly £75k, there may well be another £50 or so you could find if you really needed to.

So, worst-case-ish calculation: take the £280k mortgage, deduct c.£4,070 capital repayments, £50k inheritance and £3,850 savings = mortgage of roughly £222k.
Even if we assume your new mortgage rate is 6% (which is quite a pessimistic assumption), then interest is about 1110/month.
So, if you can afford £1,500/month, you can comfortably cover all the interest AND still repay nearly £390/month of the capital, which I think is actually slightly more capital than you’re paying off now.

Obviously this is only rough maths and we don’t know what mortgage rates/products will look like next August. And you also don’t necessarily have to throw every penny of the £50k at your mortgage, especially if it has emotional attachment to it; you could also keep a bit of an emergency fund for example.
**
But, I guess that Im saying is that I really don’t think the numbers suggest you’re heading towards a situation where you suddenly can’t afford your mortgage. Even if you have to switch to a 6% rate, the sums still work.

Youve also got nearly a year to save, plan and adjust things if necessary. Maybe you can use this time to work on your expenses and see if there’s any possibility of further savings? You may surprise yourself. Even cutting £50 spending a month would make a big difference.

Best of luck - I really do think you will be fine.

A year is a long time. I dont think the war in Iran will go on much longer than the mid-terms. Look at how much the situation has escalated in just seven months. In another seven weeks we will either be in the midst of WW3, or it will all be over. One thing's for sure, it can't continue the way it is for much longer.

Op, I know this seems stressful but we've never paid that much and we remortgaged recently and our mortgage is bigger than yours.
Please please try not to worry.

You can seek a new mortgage deal a few months before yours ends and I'm sure you'll get a better rate than 6%.

In the meantime, if you get inheritance, put it into savings and if you get to that stage and the rates are 6% (I am sure they won't be) I'd just withdraw the 'extra' needed from the inheritance to top up the mortgage each month.

However, I really think you'll be fine. We are currently on a tracker and haven't gone much over 4%.

In the meantime, I'd be saving a little each month to give you a buffer (everyone should have a 1K emergency fund, if they can) to give you that breathing space. It doesn't matter if you can't reach 1K for a while, the point is there will be a little money aside in an easy access account for you.

You absolutely CAN do this and have been doing it.

When I was changing from one fixed rate to another even though I took the deal the actual new interest rate didn’t take effect until after my current rate had expired. I still had the lower rate right until the end of that fixed deal.

You will be investing 50k more equity into the house. This will decrease your monthly payment because you won’t be paying interest on that cash.

i am currently downsizing as I am also a lone parent. I resisted at first but now i feel relief at my decision.

Unless I’ve missed it in the document that’s not the internal stress they’ve applied to it though, those scenarios are just fluctuations shown because it’s a variable rate mortgage and there’s 3 parts of that mortgage (can’t work out if it’s additional borrowing or a funky loan made up of different parts)

did you have a 5 yr fix?

also the stress on lower terms if you were low rate still might’ve been relatively small, could’ve been revert rate + a small percentage

so if you reverted to BBR+2% that could’ve been as low as 2.01+ a margin on top, so might’ve only been stressed at 3.5% (for instance) (assuming there’s no floor on the lenders variable rate)

This is an example of Lloyds or Halifax.

https://www.scribd.com/document/722638783/Mortgage-Illustration

Ive been wondering about that. We're on 1.5% ending soon, I'm not convinced we were stress tested properly. We had a big deposit for first time buyers and it was accepted very quickly. We should be OK by the skin of our teeth but it will wipe out practically all of our disposable income.