Are people who own their own homes or have a mortgage worried about bills?

[gotelltheoldmandowntheroad]

If you have a mortgage or own a house outright, does it usually come along with being okay financially?

Do you all have thousands in the bank? I assume you do because things come up like repairs and services that can be expensive.

So with the energy hikes and other cost of living issues, what happens? Do you know you will have enough to cover the bills? Or are you high earners along with owning?

If you couldn't pay your utility bills would that mean your house would be under threat?

I know nothing about it all as no one in my family has ever had a mortgage.

I’m in my 60’s and my mortgage is paid off so no monthly payments or rent. When I finished paying in my late 50’s I started saving the money I would have spent on the mortgage.
That means I have built up a nice cushion of savings for emergencies and to help out my adult DC’s.
I’ve often wondered how people pay rent when they are retired and on a pension.

@Pippa12 a12 the Torys rely on the older vote, so HB rules have been different for pensioners. There's massive investment going into over 55 housing. It wouldn't suit those who've had children post 40, though.

Do you all have thousands in the bank? I assume you do because things come up like repairs and services that can be expensive.

Why on earth would you think that?

We own our home, most major things that can go wrong with our house are insured.

Why would having a mortgage make a difference? Still got to pay a monthly fee, albeit probably lower than renting in most cases.

We are going to struggle with the energy payments and increases in living, particularly as we've just had a baby so nursery fees need to be paid too. Our savings went on the house deposit some years ago, then a cheaper than most wedding, now our baby.

We are youngish and have only ever been adults in the post 2010 low interest rates post 2008 recession period. We were naive about how inflation can impact, and feeling the pinch as a result of our lack of savings as we were never taught otherwise.

We're just thankful we were offered a mortgage fix the day before the interest rates last went up, so our mortgage is fixed for the next 5 years at 2.8% which was less than our last fixed deal (thank you covid house increases for upping the value of house just enough to drop lvt a little!)

Ultimately there are options if you can't afford your mortgage, if you've got equity you can extend your mortgage, request a payment holiday, or a move to interest only. But yes if you can't may your mortgage, they can repossess.

I guess fully owning your house gives you more security, as you don't have to pay the monthly rent/mortgage. If you needed to remortgage you can for a lump sum though that's stupid unless absolutely needed.

They are two very different scenarios. If you own your house outright that would generally mean you are either quite wealthy and bought for cash or are older and have gradually paid off your mortgage over the years. So in that case you may have more disposable income than someone still paying off their mortgage or you could be living on a pension and possibly some savings.

Having a mortgage is essentially like paying rent to the bank. They own the house and you are gradually paying them back.

having a mortgage can be cheaper than paying rent but obviously then you have potential bills to pay that come along with being a property owner.

if you have a mortgage you prioritise paying that before other bills. Your mortgage and council tax.

we own our house out right and are financially comfortable but I’m still worried about bills this winter. We can manage but I don’t want to be paying a fortune to companies who are already making a fortune.

Some of us are old and got a mortgage at a time it was easy to get much cheaper than rent.

We have savings now for the first time in 20 years. Prior to that we just winged it. Roof broke? Lend money to fix it or send DH up with a ladder and cement. Plaster coming off? Live with it. Etc.

Well I still don't love bills, but I can pay them. And yes, when I need a new boiler or roof repairs, that will cost thousands, and these are costs of owning your home - it still works out cheaper than renting over time. If I ran up big debts secured on the house then I could lose it, but utility bills etc aren't secured.

It is usually only in the early days of your first mortgage that things are a bit precarious. Mortgages get easier as time goes on.

Well it depends on income and the size of the mortgage.

Lots of people have stretched and are going to really struggle now with interest rates going up.

Others are are old (in early 60s) and can't work anymore but haven't got their state age pension yet. These people are possibly the poorest as they don't have many options to earn more.

Well this is one of the things that prevented me wanting to own a home. I grew up with poor and irresponsible parents and got into debt very early in life and opted for social housing as security, which it is. I'm still in debt and am paying it off now and my husband wants to own a home but I am really put off the idea of a liability to a bank tied to my home and don't want to enter into a mortgage, let alone right now.

Yes and no.

We are currently in a fortunate position of having disposable income but I'm worried about bills going up and how this will impact our lifestyle. We have already started eating out less/ordering fewer takeaways. I shopped around for cheapest school uniform this year to save £15 that last year I probably wouldn't have thought about. Our disposable income is around £1250 a month though we save half of that so can be easily eaten up but massive energy bill hikes.

We work out of the house so although fuel costs have risen I think we will 'save' compared to WFH come the winter. Our jobs are as secure as they can be so not worried about our unemployment.

Not worried in the sense of losing our home. We have fixed our mortgage last year so have another 4 years at 1.57%. Monthly repayments are less than £900 which is about half what rent would be. If anything, owning our home is one source of comfort. We have approximately 50% equity so depending on what life is like in 4 years we would hopefully be able to afford to remortgage at a higher rate.

We have six months of fixed monthly outgoings (not monthly pay) in an easy access savings account. Some premium bonds and other savings that probably add up to 6 months our joint income.

I am however very worried about other people I know.

We have a mortgage (mid 30’s bought in 2018.) We didn’t borrow the maximum amount and have overpaid as much as we could- luckily my husband had a pay rise. Covid helped us in that no holidays/social life eating up money and we were lucky to have secure jobs (he’s in IT and I’m a nurse.) We are worried. We’ll have to re mortgage in 2024. Plan is to overpay as much as we can, harder now though as I’ve just had a baby so part time hours/nursery fees and no spare time to do agency shifts.

We have friends who are in a much worse situation thouugh- borrowed the maximum/ have cars on finance/ already using credit cards so we feel fortunate.

If you're in social housing and you like where you live I'd stay there.

I have mortgage and am worried yes.

Your housing, whether its rent or mortgage needs to be your priority though. I'd always pay that first over any other bill.

If you’re currently in social housing, and can stay there until you choose not to, then you probably shouldn’t swap it for a mortgage right now.

But you should save as hard as you can, in something like a S&S ISA, if you have spare cash that you’d otherwise invest in housing.

Your mortgage is your priority as it gives your mortgage provider a “real right” in your property. Your debt (the mortgage) is secured against your home and is vulnerable if you default on debt repayments whereas utility bills are unsecured and gives the creditor only a “personal right” to recover the debt from you.

Then I’d pay my council tax and utilities next (as council tax has expedited recovery process and utilities I don’t want cut off) with say subscriptions etc at the bottom. I am a solicitor and did some debt recovery years ago as a trainee. In my experience, the really important thing is to engage with creditors. If you call them and say I’m struggling and try to arrange regular payments however low, they will very likely appreciate that you have done so and try to work with you. It’s the lack of contact that will cause spiralling enforcement measures etc. It’s generally cheaper to creditors to arrange a payment plan than pay for enforcement. They will have heard it all before and is an anonymous person on the line so don’t feel embarrassed or ashamed calling up. It’s very common to not be able to afford debts and certainly at the moment.

Ours is a double income household and we have one child. I do worry about bills but more that it inhibits me 1) giving money to family members that need it 2) saving and 3) doing nice things/going on hol. I appreciate that is a privileged position to be in - I am from a low income background and do not take it for granted. We have some savings (less than £10k) and both have pensions. If one of us lost our jobs we’d be pretty fucked pretty quickly hence the savings priority.

I have a mortgage, a good job, and am worried, definitely.

You pay the mortgage and council tax as you can actually get a prison sentence for not paying council tax.

Did your dad buy is home outright with cash or via a mortgage.
In your op you stated that no one in your family had a mortgage.

Do you all have thousands in the bank?

What a bizarre thing to think! Do you really think that all people with a mortgage are one homogeneous group-all exactly the same?!

We own our home outright, paid off mortgage last year through a combination of a lucky buy of a London flat at exactly the right time in the late 90s then a move out of London, and a legacy.
However neither of us earn a great salary, both of us less than the average salary so we don’t have loads of savings and I don’t have a pension. So while we don’t have to worry about mortgage or bills, I do worry that the house is falling apart around us.

Sorry, I mean we don’t have to worry about “do we pay the mortgage or do we pay the bills” as the mortgage is paid - bills are still a worry!

Not quite. Property values increase faster than the cost of mortgages typically, and the payments you make build up equity.

when you reach a point where the equity is more than the debt you have an asset.

Our mortgage is £700.00 (4 bed) - it will always be the priority over anything else. Shelter, food then heat is my rule of thumb.

Not everyone that doesn’t have a mortgage / owns outright has tons of money.

We paid off our mortgage with inheritance. We are a very low income family - dh works full time for just above min wage, I’m disabled and can’t work and we have two dc, one of those is disabled. We already get all the benefits we’re entitled to, including PIP / dla and carers. But our outgoings are large. We don’t have a mansion - just an average 3 bed semi. We can’t downsize etc as we need this much room to live and we already live in a relatively cheap part of the U.K.

I have £400 left of my overdraft till payday and no savings. If something breaks with the house we are fucked as we will have to pay to fix it ourselves. We have substantial debt from having to pay for roof repairs and all sorts of house stuff. We already pay ££ for energy and can’t reduce further. I am petrified of the coming increases. We just can’t afford any more than we do and already reduce as much as we can.

We have a mortgage but borrowed less than we could have done to keep the repayments manageable in case one of us was out of work (neither have very secure jobs). That hasn't been a problem for the first six years of home ownership as we've both been in contract all this time, and will be for another five years now. So it means we can absorb the extra cost of bills from money we usually save. There's a lot of variety in how home owners operate though, probably the same as renters, everyone has different circumstances and it will affect some more than others. I guess a lot of it boils down to attitudes to risk!

What's your worst case scenario?