Please can someone help, panicking so much about mortgage

50k would last you for 10yrs even if the interest stayed at 6% all that time....is this really that desperate a situation?

If you’re on almost £75k then where is all your money going? Are you paying off debts or something? I’m not sure why you’re so worried on that wage.

Where is that £50k today? Is it working hard for you or just sat in a low interest account. As a priority I’d be making sure that was invested well and could provide more than £50k by the time you come to remortgage. Then if interest rates are still high I’d use a big chunk of it to reduce the mortgage and perhaps go on interest only for a while to manage your monthly outgoings. You’ll pay more interest in the long run interest only but sometimes immediate cash flow outweighs that issue.

If you have access to £50k surely you can use this to meet the shortfall between what you can avoid to pay and what you need to pay? Say this shortfall was £600, it would cover the difference it for 7 years of payments. If rates are abnormally high you could lock in for just two years or let yourself go onto variable in the hopes they come down soon.

How small is small DC, if you are earning 70-75k then 1,600 shouldn't be a huge struggle which suggests you are battling childcare fees maybe? when do they stop?

Otherwise I think you need to look closely at your budget.

I do think it would be sensible to use a reasonable amount of the lump sum to overpay now. The less interest you pay will work massively in your favour as you will eat into the capital more quickly. I think as someone else has said the smaller loan to value ratio will likely give you access to better products and more flexibility in the future.

Looking at a mortgage calculator, it looks like your mortgage will still have 29 years to run if you're estimating £270k at 6% making your payments £1600 a month.

Paying off £50k will reduce your mortgage payments to £1350ish but you'll still be saving nearly £100k in interest over the remaining term if you do.

You can't afford not to invest that into your home.

You can, by however much you have already paid your mortgage for (unless age is preventing this). So if you took your mortgage out 3 years ago for a max of 25 years, it would be down to 22 years next year and you could go back up to 25

Deep breath take a day or so and then start on a action plan.

If you know your property value roughly then start looking at the LTV. What would you need to get to the next bracket down as that can make a big difference and you might not need all 50k to do so.

Start looking at other lenders via comparison sites (remember not all are on sites such as HSBC) and also do the maths often on a short term fix it doesn't make sense to pay product switch fees.
Go and speak to a mortgage broker (who don't charge a fee there are companies out there) and work out options in advance.

You can lock in rates up to 3 months before. We locked in and changed it multiple times as rates reduced before switch date with our current lender.

Look at extending the time this can also reduce monthly costs.
Keep an eye out on your credit score (there are free sites for this) and if needed work on improving. Do not take any credit out in the 4 months leading to renewal.

2.7% is low and not likely to be anywhere near but there are also plenty of 4% mortgages depending on LTV category.

With all due respect if you're earning 74k, and only managing to save £350 what on earth are you doing with your money? Unless you have some crazy expense you aren't mentiong, £1600 does not sound like a crazy amount.

Can you take in a lodger?

I'm lost.

Op you say your salary is in the region of £70k but you can't manage a mortgage payment increase to £1600?

Let's assume you pay into a pension and student loans. After tax you are still left with over £45k a year, minus your new mortgage payments leaves you £2k a month for all your bills. Then add in any child maintenance from your child's father.

You need to rethink your other expenses, for two of you it shouldn't be extortionate - my TAKE HOME is less than that and I have to pay the mortgage out of that!

I get that an extra £600 a month is tight (£500 if you include pay rise) but you're still in a high income bracket and really need to see beyond the shock of an interest rate rise

That's a very high interest rate for sub-60% LTV. Have you looked at the whole of the market? All of HSBC's current rates for that LTV are below 5%.

Don’t panic, this is not as bad as you think, and you also have money to fall back on.

6% is very high - why do you think it will be this? We’ve just got a mortgage approved with NatWest on 4.something %, and that’s with a high LTV.

Current mortgage rates being offered already factor in their expectations that Bank of England interest rate will increase - so the fact you hear that it’s looking likely does not mean mortgage rates will go up more in future (they might or they might not depending on other factors).

You think it’s an extra £600 pm. You’re already saving £350 pm so you’re only short £250 a month.

And if you put your inheritance against the mortgage when you get a new deal, on 6% you’d save …. ta da! £250 on the interest and more than that on the repayment.

So you have no problem at all. And as it’s unlikely to be 6% you probably won’t have to put all your inheritance into the mortgage if you don’t want to.

Great advice from gaspanic, this 50k would allow you over 13 years of the monthly shortfall of the rate stays at 6%. It might go up but it might also go down next time it is up for renewal. Sounds like you do have options available to you.

Op tbis is bonkers. Kindly...you have 50k to call on, are able to save £350 a month and hope to be earning £100 extra. You earn 74k. Where is your money going??

I know its not a race to the bottom, but I earn significantly less than you (less than a third) and pay 750. 2 dc. Pets. Car. I do get UC top up but still

I work in mortgages pricing them and developing them specifically.

Do not panic is step #1

no one can predict the market and it’s a fools errand to try.

what I can tell you today is that after the announcement from BoE the market has taken that well, things have calmed from a very up in the air position. If it maintains lenders may pass this on.

it will be ok, and August 2027 is quite far away, the war in Iran hopefully will be over then and things will have settled.

your lender will work with you, they want you to be able to repay.

I was in a similar situation in 2023/24 I went from 1.9% to almost 6% the increase was about £700 a month, i increased my term but at the time I had a partner. Now im on my own I had to find that extra money. Its been difficult, i am working literally to pay bills at the moment. I am waiting 2 years and then will move to a cheaper property.
If I were you I would start looking now, thr thing is interest rates are never going to be that low again, probably not in my lifetime.

With NatWest you can overpay 20% of remaining balance each year when in a fixed product. Most other lenders is 10%.

There are multiple things you can do.

1. overpay as much as you can starting now to get the capital down while interest rate low

2. use the 50K to pay down the mortgage so smaller amount of capital IF that took the repayments down to a manageable amount. Usually you can overpay 10% a year without penalty so could do £25K now and £25K next year to get the most benefit from it.

3. if the overpayment wont make it manageable use the £50K as the extra supplement to the mortgage payment. £50,000 divided by the £600 extra you need works out at 83 months - that's 7 years. That gives you 7 years to increase your earnings, for interest rates to hopefully come down, to downsize or move somewhere cheaper.

4. You can often refix from 6 months out and most banks let you refix again for free up until the final date if its with the same bank. If yours is one of them fix the best rate ASAP, then refix each time the rate comes down even a little. Don't wait until the end.

Are you getting the child support that you should?

Can you over pay monthly now? Even putting an extra £50 towards your mortgage a month now will put you in a better position overall and when you come to remortgage as you’ll be paying off more capital and will have already started to adjust to paying more.

in the mean time, don’t panic about next year. It’s too far away to predict. Base rate was expected to have increases but they’ve just today held it so no one can predict how it’ll go.

wait until 6 months away from your renewal date and then get in touch with a broker.

@Pancis125 I'm looking on NatWest's website and seeing rates around 4.1-4.6%. Are you sure a deal switch is going to be that much more expensive?

You monthly income on £75k is £4.5k. That's not a bad amount.

1,600 for mortgage, that leaves £2.9k for living.

I don't know what else you are paying out of that, but unless you have very high travel costs etc that feels achievable? Not sure if you have child care costs?

Can you remortgage now?
You will probably have to pay an early repayment charge, but it won’t be loads as you’re in the final year of your fix.