Please can someone help, panicking so much about mortgage

overpay as much as you can and start asap -check your mortgage terms and conditions about how much you can overpay and when you can overpay -if you overpay before you take out the next mortgage you can knock off capital which will then reduce the proportion of interest you’re paying in relation to your capital to help you pay off your mortgage faster and reduce your ultimate payments.

I am well aware of that. I haven't told the op she over stretched herself. I am just flagging that there was always plenty of advice flagging that people should be prepared for interest rates to be around 5%

She may be looking at their standard variable rate.

6% is really high - I’ve just been offered 4.82 at 78% LTV two weeks ago. It’s galling but not as bad as you describe. Lock one in now and if rates fall you can always back out before it starts. What is your LTV?

Offset mortgages can be useful if you don’t want to lose direct access to the £50k. Generally speaking you don’t get the most competitive interest rates for offsets but this would be offset hugely by the amount of interest you’d save.
i had an offset when I was self-employed as my income varied throughout the year. It was great to see on the annual statement the monthly interest going down. At the point I sold the house the amount of interest I was paying was really quite low and I’d reduced the balance pretty quickly just by holding fairly substantial sums in the offset over the years.

It is usually 1% in the final year. I looked at multiple mortgage products when I was taking one and all of them had 5% for the first year of the fix falling by 1% each subsequent year.

The problem with this is that any rental income will be taxed at her nominal rate and as she earns 75k thats probably going to push her into higher rate; So she could rent the property out, for arguments sake £2k a month (no idea the real figures as thats depends on location and the property), and her rental property could for instance cost £1k a month (unlikely as rents are ridiculously high). She isnt 1k up, because she will have to pay higher rate tax on the £2k and she would also have to jump through all the hoops as a landlord which incurs lots of different types of expense.

Renting out her own place and renting somewhere cheaper sounds good in theory but i bet in practice it wouldnt be viable.

Except that it won't because OP is a higher rate tax payer so will be loosing a large chunk of her interest to taxes unless the money is in ISA (and that's only for 20k currently and, I believe 12k from next year). In a regular savings account her 4% rate would effectively mean 2,something% after taxes so if her mortgage is any more that that, it makes more financial sense to overpay it than sit on 50k.

Stop panicking and also stop following advice from random on the Internet! None of us know what interest rates will be in nearly a years time so you will have to control the things that you can - you can secure a new deal 3 months in advance so start looking then

In the meantime, you are on a good interest rate so save as much as you can. Are you claiming all that you are entitled to eg child benefit, council tax discounts - revisit your budget, make sure you get your energy sorted now before it goes through the roof

If you want to throw figures etc around then use chatgpt as at least it is impartial

It's usually 10% in the final year. If she did this she'd be paying £2800 to pay extra interest for the next 11 months. (Post edited by MNHQ at the request of the author).

OP don't listen to this.

Maybe when the op took the mortgage, she could have afforded a lot more?
Circumstances change, you know?

We always used London & Country when we renewed our.mortgages because it is all online/the phone, they don't charge and have access to better deals that normal.people.can't get.
One year we even got £500 cashback which wasn't available on the high street.

I don't understand what you mean.
People are often advised to temporarily switch to interest only when going through financial strains. I thought there was no affordability check for this.

Good for you, being so financially wise 🥇

(edit to add - I was merely pointing out that telling op she overstretched herself helps no one)

All the advice I read everywhere was to always budget to ensure you could afford interest being 5%. It's not some deeply hidden secret.

As I read your posts OP, the more I think that 'the thing is not the thing'. It feels like this is far less about the remortgage but more about the weight of single parenting and I get it. Been there, done it and got the T-shirt. It's the fact that it's all on you - nothing can happen to your job because if it does, there's no other adult to rely on. There isn't someone on your team to even mull over the mortgage options and what it means to the household budget. You also refer to your child as 'small' so you're projecting many more years of this sole responsibility.

I've been there. I'm probably older than you. At one stage my housing costs were 45% of my income. Then HMRC said I'd underpaid tax the previous year and were going to recover it through my tax code. I had a £3k overdraft which I was using to it's limit and my monthly salary was £2700. It was truly a financially shit few years. But I got through. Children got older, child care costs disappeared, my career took off and I started earning more and I moved eliminating the horrendous leasehold charges that were strangling me.

I'm just sending you solidarity. You will get through this. Although mortgage rates are an unknown quantity to some extent it does sound like you will be able to remortgage at a rate that's affordable (accept it's not desirable though).

Do you have lots of other debt or outgoings?
75K is about £4500 take home a month.
Where is it all going if you can't afford £1600 a month?

I am a lone parent earning a lot less, but also a smaller mortgage.

contact your bank and if you can set up overpayments every month - this goes towards paying off the capital which will slowly lower your overall debt. Every little helps.
when it comes ro renewing get yourself a good mortgage broker to get you the best deal.

It will improve your LTV rate and thus could help you get a better rate.
If you’re able to save £350 per month, I’d start overpaying now.
It will reduce the amount of interest you pay long term and will reduce your monthly payment.
Definitely speak to your provider and/or a financial advisor.

Oh how lovely hindsight is - of course you knew! How clever you are 👏

if my data is correct, in Nov 2021 the Bank of England forecast actually predicted about 1% by 2024. and we all know what then happened* *by August 2023…. If the Bank of England couldn’t predict it happening so suddenly, how could we have possibly known better? I’m not sure when OP took out the mortgage but entirely possible she is affected by a fixed rate from pre 2023 running out.

Yep, the generally accepted 'advice' on this topic has been dreadful for a few years. We fixed about 18m ago, and loads of people were asking why we didn't get a tracker mortgage, or only fix for two years rather than five, because, obviously the rates were going to go down...

We would have been screwed if we had listened to them.

Where has 6% come from? My renewal is 4.7

I know people that have sold up and moved to cheaper rented due to not being able to afford mortgages anymore.
you have 50k, you could pay down a huge chunk, see if the repayments will be reduced a lot by doing this. You could shop around for rates, keep your credit rating as good as it can be to enable this.
you could move.
you could rent out the property and rent somewhere you can afford if the numbers stack up with tax etc.
you could use the 50k each month and hope rates go down,
you can get a second job or lodger to supplement income.
you could activate mortgage charter and go no payments for 6 months then save the money to use to top up once payments restart.
theres loads of options but its good you are thinking about it now.
start to model all the options and have plan a, b, c, d, e ready and costed out.

It's really bad advice to drain savings to pay it off unless savings interest is much lower than the mortgage interest! If mortgage rates are high savings rates are likely to be higher. I have the money to pay off my student loan but I'm getting 5% in an ISA for that money and the SL rate is nowhere near that.

That's all very well, but if you need to figure out how to pay your mortgage then an obvious solution is to look at every line of expenditure.