Please can someone help, panicking so much about mortgage

Move somewhere cheaper, it’s only going to get worse. My sibling, who is a high earner, and only has their wage coming in, has just moved from a 5 bed in a lovely village to a 3 bed in the town centre because they couldn’t afford the mortgage.

your gross take home on £74,000 should be around

£4456 without pension contribution

£1600 for the mortgage

Id be guessing most of your money is going on childcare - is that likely to end or change soon

I’m so sorry you’re faced with it I went to 1.2 to 4.8% and it was as quite the shock. What I would say is as soon as you can fix, fix with the best option you get given at the time. I did this, this year and so lucky as Trump invaded Iran the following day. NatWest will let you swap until a week before. So like the advisor said this is the worst rate you will get. If interest decreases further you can swap. I fixed at 3.8% in the end. You are very very unlikely to get something in the 2% range even if things settle

Sometimes you have to muddle through a few years focusing on cash flow, to then be more ‘strategic’. I have regularly done this as a single income household.

With savings even for higher tax payers the first 500 is tax free

If you had to then you could say your mortgage payments increase by £700 per month. Take your £50k and pay that extra £700 from it. That gets you 71 months payments which is 5 years 11 months and a lot can change in that time financially. Paying off a lump sum may not bring it down enough for you to afford the monthly payments.

Do you have a spare room? You could have a lodger which is tax free up to £7,500 per year. I know some people that have a lodger Monday to Friday during the working week. Probably not what you want to do but it’s an option

Sorry I must’ve missed it!

Ah, it’s tough OP.

We moved from the southeast to the midlands to cut the size of our mortgage.

Could a move to a smaller property or cheaper area be an option?

Or (not ideal with a child), could you rent out a room to cover the shortfall?

For now save as much as possible into high interest savings accounts- circa 5% - starting with a cash isa.

There's been some great ideas on here. You could even stop or reduce pension payments for a while if you really were desperate (I'm not recommending thus though).

Take this opportunity to look at your budgets, get the best deals on everything etc.

If you have a spare room you can earn 7.2k tax free per annum.

That's really bad advice for anything other than a very short term period necessary for downsizing for example. Interest rates are highly unlikely to come back down to 2.7% again.

If ploughing in the most part of the 50k won’t make a difference (like you say) , then I would just downsize/ downgrade. Better to own a property than no property.

I'm another advising to look into an Offset.

We have one of these - and better still, we were professionally advised to get an offset PLUS a 50:50 interest-only and repayment. Best advice ever. And even better, the last remortgage was to a lifetime tracker so we don't have to redo it, either.

I have been here and it was tough. Back in 2012 my mortgage was £1400 and I have two children and worked full time and earnt £2400 which sounds ok until you add in nursery costs etc

It is good you have time. Mortgage costs will not come down I don’t think - not for a while. If you mortgage did rise £50000 would last you 7 years supplementing your mortgage.

You can’t magic up a partner or disappear a child. You can think
of selling for a cheaper area but this will have costs involved eg moving, stamp duty and so on. How old is your child?

@Conundrummum123 of course I can’t state with 100% certainty. But all expert analysis and predictions is going that way, certainly more probable than going down. The point is not to panic op but to not shy back and think oh I’ll be fine as they’ll come down.

it is prudent to expect interest rate raises, understand what this might do to mortgage rates and then explore best options to keep op rate as cheap as possible when the time comes. A good broker can assist with that ( for free)

I have been through similar as my mortgage was due for renewal around the time of the Lizz Truss fiasco. As a high earner there is the additional problem that you will be taxed heavily on any second income even if you could take on a second job. I was in the same situation, high earning single parent. In the end with a decent LTV I was able to secure a lower rate than the headlines and you may well be the same.

You can either use your 50k to bring down the capital - put it in a high interest account until your low rate expires - or else put it in a high interest account and withdraw only what you need each month to cover the shortfall. I see that has already been suggested, and it will last a long time if you are strict, hopefully plenty long enough to ride this out.

When there is 6 months till renewal, get the best possible rate secured and then ask your mortgage broker to check periodically for better deals. Things could change a lot between now and next August.

You can also look at bringing in extra money. I made £800 one year just by switching bank accounts repeatedly. A hundred or so using top cashback. Before you know it that's a couple of months worth of shortfall covered. You will find a way.

Childcare is going to be temporary so you could use your savings to supplement your income until they start school and maybe the Orange One has gone and we get sanity in oil prices and hence inflation drops and interest rates with it.

It sounds like it's only going to be difficult for a short while, and you have that £50K cushion, you're not going to be evicted any time soon.

Sweetie you sound like you just feel unsupported.
Can I say that banks don't want to throw you out of your home.
There are loads of ways to deal with this.
Talk to the bank, also there are charities who offer good advice and local churches advertise financial advice.
You are not alone, ever.
Ive been on my own many times and me and my kids lived on spaghetti and not much else. Many people know what you are going through.
You sound like you are just feeling alone, but remember, the comfort I always look for is "be still, and know that I am God".
Keep it all together , you will be fine.

I think it’s unlikely that interest rates will go down.
I’m in a very similar position and have a sense of rising panic as it gets nearer.
We have Trump to thank for this 😢

You need a good mortgage broker.

No. Contact a broker.

I can’t give advice on this part because I don’t know what it going to happen over the next 5 years, that is what makes this difficult.

You can only control what you can control though.

I want to say, you’re a single homeowner and that’s great! You have a job and it’s not minimum wage. I’m going to assume you’ve worked hard to get here, so give yourself a little break. If you’ve managed all that, you can manage this next challenge too.

Firstly, make sure, while you’re on 2.7%, that your 50k is invested well and returning at least 5% in an account.

Now, think about how much you have in savings. If you’ve got a nice little emergency fund, I’d start taking at least some of those 350 a month and diverting that to the mortgage.

Next, time to reduce expenses. You might already run a tight budget, but everyone has something they can cut, so think hard. Last time I went through my budget, I managed to save 240 a month. Not everyone will have this much they can cat back, but even 20 dollars is 20 dollars. Immediately put this extra into the mortgage too.

Then, think about some ways to make a little extra. Can you rent out a room for a while? Do some pet sitting or baby sitting in your home (so you can still have your own DC there). We don’t know your skill set, but there’s probably something you can do. Start planning for a more budget friendly Christmas etc.

You can do this! I’m sure you can, so time to sit down and make a plan. Between savings and a wage increase, a few cut backs, and if needed, when the rate changes, reduce the mortgage by 50k. You’ve got this!

Edited to add: Mortgage stress is awful. Ours is done now, but I’ve been there. It was many years ago and rates were so much higher, we were mortgaged to the hilt and my DH lost his job. I was working, but it wasn’t enough. I remember crying a lot too. He delivered pizzas for 2 months until he got another job, we held on by our fingernails. Stressful, but worth it. I’m sure you will be determined enough to find a way.

For the overwhelm, panic and voice in your head that is foreseeable doom, albeit your situation is difficult as a single parent, thus voice is not your friend. Change the soundtrack. I am enough, I have enough, I have all the skills and resources I need to figure this out. Repeat . Your mind does not have to believe this for your body and nervous system to benefit.

Because currently more of your money goes towards offsetting capital. I suppose, it doesn't really matter when it comes to overpayment as all of it goes towards capital anyway as interest is covered in your monthly payment. But the overall burden is lower because the product is cheaper so now is a good time to make those overpayments vs. when you go up to 1.3k and will have to use the money you could have used overpaying on covering this extra interest increase.
For example, my current mortgage is £920 a month, when the fixed rate ends, it will go up to £1200. So I can actually use £300 a month to overpay the mortgage while it is still "cheap" and end up with significantly reduced capital at the renewal. An option which may not be available to me after my monthly payments go up.
As a rule of thumb, I overpay by the exact amount of interest every month which, I know is a hefty chunk out of my disposable income but it helps in the long term.