Please can someone help, panicking so much about mortgage

Speak to a mortgage advisor. They usually charge a fee but they should always get you rates that are as least as good as the rates the bank offers directly and you can speak to them six months out from renewal. If rates improve in that six months, a good advisor will get you the better rate, but if rates get worse, you get to keep the one originally offered. They can speak to you about, eg, changing the payback period. Don't panic.

Speak to an independent broker rather than high street bank. They will be able to find rates and providers you won’t.

avoid interest only. That’s really not in your best interests

Hi OP I am in the same position as you. Instead of using my savings to reduce the mortage at renewal I am looking at taking out an offset mortgage instead. This would mean that you keep the £50k in a savings account, and there is no interest charged on £50k of your mortgage. This would mean you’d only be paying interest on £220k of your mortgage. So the benefit is the same as if you were to use the savings to take out a smaller mortgage, but it means the savings are there if you ever really needed them for an emergency. Plus, every month top up the offset account with your £350 and you’ll have even more to offset the interest against.

OP, put the £50k into a Vanguard FTSE Global All Cap Index Accumulation (GBP) fund will make approx 10% return (probably higher, we are in a bull market) which will give you approx £400 a month in interest you can take out, then you just have to find an extra £200 a month. Plus you will have £50k at the end of this all going well...

It might be a little lean, but you can probably tighten your belt a bit.

(It might be worth running some of these scenarios people have suggested with regards to reducing mortgage to reduce payments vs £50k as cash to make up payments etc through ChatGPT to understand what works for you, and what level of liquidity and risk works best for you).

Some of the Reddit finance boards may be able to help.

Can I suggest the Rebel Donegan's Rebel Finance School (all on YouTube, all free, they aren't selling you anything. I have checked!) to help you improve your financial literacy so you can navigate this in a way that aligns to your needs and values. It might help with the panic you feel over making financial decisions.

Good advice here.

@Pancis125 , while I think it's a good idea to use your £350 a month excess to overpay your mortgage (if you can without penalty) , I would definitely advise AGAINST sinking your £50k inheritance into the house - it leaves you without a cushion if anything goes wrong.
Better to do as @LiuBei suggests and use it to make up your shortfall each month.

Also, you should definitely make an appointment with a mortgage broker who will be able to help you get a good deal.

I'm sorry you find yourself in this position. Please try to stop panicking (easy to say, I know), it's really not as bad as you think. 🫂

Just go to a fee free one ;)

why pay when you don’t have to, they get paid by the lender anyway.

It assumes all other costs stay fixed though which they definitely wont. In a years time we are bound to see increases in utilities for example.

If you earn £74k and you can’t afford where you live, you have overstretched yourself surely. Could you downsize? Taking a lodger is another good option if you have a spare room. When I was younger and my husband wasn’t working, we had two lodgers for ages.

Don't panic. You've got nearly a year left on your current rate. Well in advance, contact a reputable mortgage advisor. They can find rates that might not be accessible to Joe Public and they can certainly help you find the best one for you. You will be far, far from alone in having these kinds of thoughts and professional advisors will be used to looking for good deals. If, however, there really is nothing suitable (a big if), then you can look at downsizing or term extension (I know you say you're at max, but there may be flex in that). Please try not to panic. Lots of luck to you. x

Is there any chance you could take a lodger even for a short while?

We switched a portion to interest only and paid down a portion with savings and will be paying the same monthly amount when our interest rate doubles in January

Agree with this. You'll be absolutely fine- the problem with posting on here is people will start throwing out suggestions including downsizing, getting a lodger etc that you almost certainly won't even need to think about. 3 steps: Have a good cry today, keep on plodding on, talk to a mortgage broker in the new year. You've got this.

Sorry if someone has asked this already - I haven't read everything.

You mentioned you have a small child - are you currently paying nursery fees that won't need to be paid any more after next Sept if they start school next year? There would be before/after school club but it's much cheaper!

If you are currently paying for childcare, are you using tax free childcare already to do this to save yourself some money?

OP given you have 50k you could supplement your income with those, 500 a month or so…

Is your 50k in a high interest account? 4% would get you an extra 2k

No, its nearly twenty grand over the average household income!
https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/householddisposableincomeandinequality/financialyearending2024
According to the IFS her income and personal circumstances place her in the richest 8% of the population.
https://ifs.org.uk/tools_and_resources/where_do_you_fit_in

So people querying where her money goes or if she can downsize have a fair point, IMHO.

The “overstretched” comment is really not helpful. Most people could never have predicted the interest rate rises when they first got their mortgages and the rates were still around 1.5%. Our mortgage went up by £600 overnight and we had to just suck it up. So much of our disposable income gone just like that.

I thought the advice always was to make sure you could afford repayments at 5%? Noone thought rates would stay low.

Pay the 50k off the mortgage when your present fixed rate is up then see what is the best rate you can get at that time. You could run a few figures through the mortgage calculators at the new amount and various rates to give you an idea of what that could change the repayment to or ask the bank to work it out.

Would it be possible to downsize ? Or at sounds like an expensive house if you’re at a good ltv and still owe £270 ?

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.

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.

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.

Where has 6% come from? My renewal is 4.7

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.

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.