Can you cope with 6/7% interest rates when your mortgage expires?

[onthefencesitter]

www.bankofamerica.com/mortgage/mortgage-rates/

American interest rates are at that level now and given the level of tax cuts that are going to be implemented, I think we would be at 6/7% at least by next year, perhaps even 8%

Vote YABU for no.
Vote YANBU for yes

Of course. When we bought our property we knew we were buying at a historic low and that rates would go up. The mortgage docs also had some calculations on showing what we would pay when our current rate ends at a number of different rates

No. Circumstances have completely changed since we bought and I’m now a single parent and have two sets of childcare to pay. We borrowed 1.5 x joint income. I’m now borrowing 5 x my income on taking over mortgage. I can just about afford 4% which I have a fix until 2025 for. Hoping that’s long enough for things to calm down a bit (or I’ll have had a huge pay rise).

I find the smugness on these sorts of threads really nasty. Most people need a large mortgage in order to get on the property ladder at all unless they have help. If you borrow £250k (the cheapest you could realistically buy a house for around us) you’d still be paying around £17.5k per year just in interest at first at 7%. And you would be in a very small house in a not very nice area for that. Particularly if you’re also paying childcare it would be very hard to afford that on two average salaries.

We have four mortgages; our home, a holiday property (we had a caravan and sold it to buy a small house in the area) and we own one rental and we bought my mums house couple of years ago as she got divorced and couldn't afford to buy her husband put (second marriage- not my dad).

Anyways, 3 out of 4 mortgages are up for renewal next year.

We are lucky to be comfortable financially as husband has a good job and I am well paid for part time, but all three increases are likely to have a big impact on us.

We spoke to our financial advisor and he suggested, when it comes to renewal time on our own property, we get around a 2 year fixed term on the best rate we can get, and to keep our payments similar to what they are now, we (for those two years) increase our term in years or go interest only. And then once (hopefully) the market settles we can reduce the term again after the two years is up. May be an option for others too.

It's not ideal, but makes me sleep better knowing we have an option should the interest rates keep rising as they are.

Dh redid ours yesterday, he was paying 2% and now 4.43%, it's a £40 per month increase (62k mortgage).

It's not up until new year but the lenders have said that the offer is valid until end of February so we're really glad to have the peace of mind.

start looking as soon as possible for the new mortgages.

most offers last 6 months, and you can eke them a bit more (or a clever broker can) if any of your mortgages end in April then start looking now. If rates drop in the mean time happy days as you don’t have to go through with the offer.

if you’re doing this, add the product fees to the loan then you won’t be 995-1499 out of pocket per mortgage up front.

use a broker, we’re do charge for arranging a mortgage, but at the moment with things the way they are if another lender offers a lower rate product once we’ve secured an offer we’ll do the second app for no advice fee.

I think that is what has caught people out. Lockdown and wanting bigger and better. Understandable but not necessarily sensible as inflation was already warned about at the time.

If paid monthly you aren’t saving any interest.

We are on 0.9% until Jan 2027. If things don't change it will be a massive lifestyle change when it ends. I think we could afford up to a 9% interest rate with a shitty standard of living, beyond that we would be looking at payment holidays, running through savings, second jobs and eventually losing the house.