Terrified I’m going to lose my house

[Hangrysaurus]

ever since this shit show of a mini budget and the economy and mortgages spiralling into chaos, im so so worried about losing my home.

2 kids in childcare to work, will be switching providers to save but dh and I take home about 93k before tax and about 65 after (thanks student loan)

mortgage is due next late December. We have help to buy too, which comes to the end of the 5 year interest free end of next Dec too. We looked at switching when lloyds had their 3.7% rate but with the 4.5k erc it was an extra £700 per month, close to 1500, aka totally unaffordable, even the broker wasn’t sure it was a good bet.

if we pay off the htb (we have about 40k in savings for this) and depending on house value htb is about 75k, if we did this we’d need to add 30k to mortgage or borrow it from parents (although that’s the cash draw down from a pension that the government have also fucked). Then we’d have a 60% ltv provided the house price doesn’t tank too much as we lose our equity.

when we did our mortgage they stress tested to 4.5% as that was the highest rates mortgages had been in the previous 10 years. We were very comfortable in terms of affordability and we’ve done all the right things in terms of future proofing, aside from having kids. It shouldn’t be this way.

i know the banks last resort is to take the house but honestly I’m spiralling. We both recently got new jobs, a combined about 15k a year increase but it ‘only’ amounts to be 400 after tax. Will it all be ok?

(if this comes across as insensitive im really sorry don’t mean it to be)

Can you consider just paying the interest on the HtB? I know it isn't ideal, we're in a similar situation and had planned to remortgage to pay ours off but it's not possible right now, so we are just paying the interest (around £50 a month) until we're in a position to remortgage.

I’ve suggested that to DH, that we pretend our mortgage is as the inflated one would be from when I return to work post Mat leave, and save the rest to pay off the htb.

i know I’m lucky to have any spare cash, I was hoping to be able to continue counselling post mat leave but I don’t think I’ll be able to as it’s just too expensive and the nhs won’t cover it past one year PP

Is your DH against pooling money and sharing responsibility for clothing the kids?

I didn’t even know you could do that! Does it not go up every year?

We're in a similar(ish) situation (we don't have the big savings) and are due to renew in April 2023. Our mortgage is currently £898 per month. I was similarly panicking so we did a worst-case scenario on a spreadsheet last week and it really helped. Hopefully, this will never happen but we put the mortgage up to £1500 and energy up to £500 (currently £200) just to see and it was surprising that we could still afford it. We might have to get rid of some things like holidays and gym memberships etc but it was still reasonably OK. Perhaps you could do the same, once you see it in black and white it's a bit more reassuring.

I'm still also at the stage where I still think that somebody will do something - a bit like the energy bills, as most people simply can't afford such a massive rise. Or people will afford it and the rest of the economy will go to shit as you'll have to pay for your house and stay in it. No new clothes, restaurants, days out etc.

I also realise that we're incredibly fortunate that we could just about afford it, I fully understand that many people can't. Roll on a General Election!

Do you realise that people who are applying for debt relief orders have a. No savings; b. Debts (obviously!). c. Have to pay a fee of £90 to the Insolvency Service d. Can only have £75 PER MONTH surplus after ALL ESSENTIAL expenses.

You have nothing to worry about.

the bulk of that £700 (which i forgot to say has to cover fuel and car stuff too, and some necessary home improvements) is his, about £200 is mine and I buy most of the kids stuff

Er, what? Are the DC not his? Why does he not spend his money on kids stuff?

Your eventual aim needs to be equal personal spending money after joint house and child related stuff has been covered. I'd include your counselling in the household costs too. It's not like it's your hobby spending.

Or does he think the DC are solely your responsibility?

If I recall, you have 25 years/when you sell/end of mortgage to pay the full amount back. Obviously the interest doesn't take from the loan but me and many others don't have much choice at the moment!

I thought the interest increased every year though?

Families who take home £700 a month aren't even entitled to free school meals.

I couldn't really understand your maths tbh but it doesn't sound like you've got any reason to panic.

i don’t think we’ll be in poverty just that our house which was affordable at the time of purchase could become unaffordable, the area we live in will have as well, it’s been substantially gentrified since we bought our home.

£65k after tax income.

£700 a month spare after all bills. In 'worst case scenario' scenario.

Still means that you are paying out £4700+ on bills each month, only £1500 of which is mortgage.

Fuck me op, I think you have a way to go yet until you are looking at being homeless in a one-room B&B.

You might be worried that your standard of living is looking likely to fall, but imagine if all you had was £700 just to pay bills. Read the room ffs

We split all outgoings down the line atm, aside from personal expenses but because he earns like 15k more, it impacts me more than him.

big ticket things like winter clothes, coats shoes etc we split 50/50 but cheap clothes/ shoes/ general stuff for nursery I tend to just get, costumes etc same with socks, pants you know the more ad hoc things

700 seems plenty

Charity shops
Cheap holiday next year or no holiday
Be honest about food shopping. Where can you cut down or switch brands.
Try to cut on heating costs
Switch water off 15min early
Turn thermo down a degree or two.
Look for Xmas gifts now for kids spread it out.
Tell family that your not doing gifts this year other than kids due to costs.

You will have enough to live on, easily, just not to fund the kind of lifestyle that you might want. And, if you don't have any more kids, then the childcare costs will go down once they start school.

It does sound like you need a fairer distribution of money between you and your husband, though. There's no reason you should be paying for all the kids' stuff unless he is paying a proportionate amount for other household expenses. Either you both need to put (a proportionate amount, so you put 40% and he puts 60% would be fair, given your incomes) more money into the joint pot to cover the children's expenses, and then keep your individual money purely for your own personal expenses, or as a minimum he needs to step up and be paying for 60% of their things.

£700 spare each month!? I understand everyone is accustomed to their own lifestyles but it sounds like you’ll be fine, we keep dipping into an unplanned overdraft despite cutting down bills, cancelling things etc, our rent eats our income and I’m terrified of it increasing as we have no room for anything, I’m already skipping meals to make food last longer, we are on breaking point.

Regarding counselling, if once you've budgeted everything there really is not enough for counselling it is worth speaking to your counsellor as some offer reduced rates, and with things as they are they might go for that option rather than lose a regular client. Although I think you need to Impress upon your DH that the money for counselling needs to be found out of that £700 as it sounds like it is a priority for you, especially if you are making progress with it.

The interest does increase, and it is RPI +1% if I remember rightly (ours isn't up until 2025) which atm is horrendous (our loan is £42k) but, if it comes to it and we have to pay that portion on interest only while reducing the remainder of the mortgage on repayment for a few years then so be it.

When is your first child 3? You'll be entitled to 30 hours childcare then which will assist with the fees - we have 10 months and we are counting down.

How often to you/DH buy clothes?

I appreciate kids need clothing, but in reality, there’s Vinted/FB Marketplace/sales where you can get bargains.

I spend about £100 max per “age size” ie age 18-24 months for DS & that covers multiple nursery clothes, coats, shoes, hot and cold weather gear plus bedding. I then sell what I no longer need when he grows out of it, and put the other stuff away for future DCs.

Even spending £200 on clothes/toiletries/fun spending, that’s £500 per month to save. And I’m sure that there are cuts to be made on food and other bills or spending.

Are you sure?

Our mortgage is £1500, we earn about £110k pretax (£70k ish net), no kids, but when I was pregnant the intention was for husband to give up his £45k job and we’d just live off my salary. It would’ve been right / no savings but implied a £1,500 mortgage + other bills is doable on your salary…

£700 spare? You'll be absolutely fine. Calm down!

I think I’ve done the maths wonky here then becuase those figures aren’t right, I used to salary take home after tax thing I found online, it’s my 2.2 plus his 2.9, it’s about 3700 in bills which is about right.

It’s not the ‘worst case scenario’ now, it was the worst case scenario 2 weeks ago, that mortgage was 1500 that was with the 3.7% from lloyds but now rates are 6%+ and that £1500 was with some of the htb added. 6%, I’ve not done the maths. Our childcare is £600 a week so about £2.2per month, unfortunately 30 free hrs only slices off £78 per week; better than nothing but not a silver bullet.

i know we’re not on the poverty line but I am concerned my house will become unaffordable

Read the room OP
There are posts in here about ppl who are genuinely homeless, in temp housing with water running down the walls and here you are with £93k income and £40k savings claiming you'll lose your house.
Absolutely ludicrous.

Does that £700 a month include food?

Because we manage on £500 a month - and out of that we have to buy food/petrol/everything else.

Seriously. You're in cloud cuckoo land.

Your house isn't unaffordable and won't become unaffordable, especially if you revise your expectations around non-essential spending.

What is unaffordable is your current financial set up, where you earn less but pay proportionately more for all your bills AND fund the children's clothes etc. on top - how is that fair or sustainable? If you have totally separate finances, how do you arrange nursery payments?

And the big one, if you're on mat leave how do you fund anything with limited maternity income? Please don't say you're contributing from your own savings?