How's everyone planning to handle the crazy mortgage rates?

[adviceseeker22]

One of my sub accounts expires in November and I'll have to pay £350 on top! If both subaccounts were to expire my mortgage would double ;(

u dabbled with high street bank ISA’s initially but that was a waste of time. I re-started investing in 2007/8, initially bank shares. From 2010 til October last year is when I made the bulk of my returns, and realised what I’d made was more than enough and index were crazy, and cashed in.

Ok that makes sense that it was over a long period. I only finished uni in the mid 00s 😆

The thing is that people remortgaging and facing higher rates now:

a) Have got a ton of equity in their home due to crazy house price rises

and/or

b) Have had the benefit of super low interest rates prior to now.

I can’t get too upset for them?

You sound nice.

Equity is worthless unless you sell up and live somewhere you don't have to pay for.

@ManchesterLu

Guessing you don't live around here! Housing starts at £350k. But well done for not getting caught up in the upsizing, moving to a better neighbourhood etc obsession. We paid off ours late last year but I'm 17 years older than you, still young for mortgage free. We could have bought a larger fancier house on a better road and chose not to

What about people who bought recently? We've neither lots of equity nor years of low interest rates.
Not everyone is 20 years in...

Prices have gone up an average of 15-20% in the past two years. Thanks in part to the stamp duty holiday. So they really do have lots of equity!

Thank you, yes, I am lovely!

Equity is super useful when it comes to remortgaging. As well as in the future when you come to sell.

We fixed until Dec 24 and paying just over 600 at the moment

Have applied for another job 😭 so will now work 3 jobs if successful.

Lol. I bought last year on a 2 year fix. Only equity here is my hard earned deposit.
Equity is also useless if you still need somewhere to live.

The only longer term method to try to soften the blow I think is either

1. emigrate
2. investments

by investments I mean, stocks, shares, funds, crypto (dare I say it but it can produce huge wealth). People need to financially educate themselves, learn about compounding, low risk investing. It really is the only way to maintain cashflow now. We wouldn’t be able to absorb a £2.5k increase in the monthly mortgage if we didn’t have this to fall back on.

I really feel sorry for those who are saying they are taking on extra jobs. The lost time with family, friends, enjoyment of life; what kind of life is that. Make your money work harder for you. There are so many books, podcasts, online material to learn about how to invest carefully. It is a poor man’s game to use salaries alone to fund lifestyles.

@Fretfulmum, surely the vast majority of people use salaries to find their lifestyle, and it's a rich man's game not to 😬.

Equity isn't getting anyone lower interest rates though is it? I have a huge amount of equity but I'm still looking at paying £7000 a year more.

I don't think you sound either nice or knowledgeable

What is the average increase per say £100k working out at? If say you're at 2% at the mo and the increase is 7% (worst case scenario)

Depends on the term, but if you take it over 25 years it goes from £424 to £707. So an increase of £283.

I use this calculator if you want to try it with different figures.

https://www.google.com/search?ie=UTF-8&client=ms-android-samsung-rvo1&source=android-browser&q=mortgage+repayment+caulculator

That's not true! We bought 8 months ago, as first time buyers. By the time our 2 year fix is up we'll have negligible equity, plus the rate we're currently on isn't "super low". There's a very real chance we'll lose our home.

@CuriouslyDifferent way do you mean please by indexs were "crazy"

Last year the s&p and the Nasdaq indexes were at all time highs, because of most equities within them…. They had risen by a silly amount shortly after the Covid dip, i had some equities which had risen by 30% in 2 years, my partner was in a fund which had risen 98% in 12 months….

They subsequently retreated, although they have now come back. But I wouldn’t invest in them at the moment, not when I can get 5% return for virtually no risk in short term money market funds. that’s reflective of savings rates, because of the base rate increase.

@CuriouslyDifferent thank you!

Was your partner in Scottish mortgage. Mine went beyond that and I can see now I should have also cashed in.

Mortgage is fixed until 2025 so it's fingers in the ears, I can't hear you! La la la.........

Realistically I need to put away more every month from now on, but I never seem to have money to do so.

No, she was in Baillie Giffords ETF tech fund…. Same fund researchers and operators though, just a different strand to it.

SMT’s rollercoaster is a great example of what happened.

@HideTheCroissants seriously only £20 after mortgage and council tax, how did you pay for electricity, petrol, food? How long did that last for and surely you didn't hang on to your house?!

But you need money to invest in the first place. People are spending every last penny paying to survive many are not able to take advantage of investments!!

Got a low fix until 2026. I’m shovelling huge amounts into my pension (I’d be doing this anyway) and will use the 25% tax free lump sum to pay off the balance as I will be able to draw some down by then.

Paying off the mortgage on a buy to let with any excess cash and have put the rent up slightly, but it’s still significantly under market rent. It makes more financial sense ask the tenants to leave and sell up but have chosen not to do this.