To be terrified about mortgage

[melodypondisasuperhero]

We finally managed to get our first mortgage last year and now this is happening. Our rate is 3.09% which runs out in August, currently the follow-on rate is 5% but I imagine this will go up several times before the end of the fix. We could manage 6%, probably just about 8%, but any higher than that and I really don’t know.

AIBU to be terrified? Or am I missing something?

What she said

YANBU to be worried if you're remortgaging next year.

If rates are too high I would do one or both of the following:

1. extend mortgage term

2. get a lodger if you have a spare room

We are moving and porting our mortgage over as we are downsizing we will have funds left over (not much ) for the first time ever. Our term ends in April 2024. Do we ride it out and wait and see what happens or put in the money made from sale into overpaymengs which probably might not make too much difference anyway? Don't know what to do?

Do you think mortgage companies/ banks will contact those of us who are due to have our fixed rates ending within next 12 months ?

Not unless they're obliged to. Had numerous mortgages and they are very happy for you to fall back on to the SVR given it's more profitable for them than offering another deal.

Because it's not a budget per se. It's a mini budget and all they need to do is anounce what they're doing.

"How is it that KK and truss can just decide on this budget without supporting evidence how they think it will work?"

In the past, uk governments relied on convention and responsible behaviour to establish a reputation for prudent and stable governance, sometimes lauded as soft power.

These days you can do whatever the fuck you can get away with, legal or illegal and circumvent these conventions by making up terms like mini budget, long term plan or special financial operation.

How many years is advisable to fix for?

Yep, when I had to leave my job through ill-health, my mortgage lender wouldn't let me take payment holidays despite having significantly overpaid on my mortgage. Fortunately I'd very much hedged my bets, so had 3months take home pay in an instant access savings account that I could draw on immediately, plus further savings in a couple of notice/fixed term accounts that paid better interest. That meant I could carry on meeting my expenses immediately from the instant access account, and give notice for later withdrawals from the other accounts, without losing interest.

So with that in mind I'd suggest getting your 3 month redundancy savings cushion in place first, and then do a 50-50 split between savings and overpayments. That way you're helping to increase your LTV and reducing your vulnerability to interest rate rises, but still leaving yourself room to deal with unexpected cashflow issues. And while the savings interest rates are hardly ever as good as the borrowing ones, you can get pretty decent interest on certain regular saver accounts which will help a bit. Probably best to avoid the fixed interest long term accounts for the moment though, until it's clear how the interest rates for those are going to be affected by any Bank of England rate change, even though they usually pay a better rate of interest.

Not quite true as housing didn’t go up. It plummeted and if you weren’t in London /South East then it didn’t have the massive climbs. .

The house we had our 22% mortgage on is only worth £350,000 now. I looked it up and it sold for that price a few months ago.

We were still in negative equity a few years later

We sold our house which was still in negative equity. BS gave us the go ahead to sell and said we could add the amount onto the next mortgage/house.

Then 3 weeks later. After a super quick exchange and completion of the house. Just after I had the phone call to say everything was completed the BS rescinded the offer.
The woman I spoke to didn’t seem to understand we didn’t own the house anymore and said she would call me back.
No mobile phone in those days so I said not on this number.
They refused to give us a mortgage on our next house so we went elsewhere and we never heard from them again till 10 years later we received a letter saying we still owed our negative equity amount.

I asked for all the paper work to do with this account and I never heard from them again.

100% this.

The Tories have been appalling but this has been coming since 2008. They have had a decade to address the problems in the economy and have kicked the can down the road for over a decade. In fact decided to make it worse.

If you’re already on over 3% that’s a good cushion, that was high for last year!

I’m fixed at 1.3 so it’s going to be a big change when remortgage comes in a year and a half.
I need to look at the figures for paying off a big chunk while on the low rate vs any other savings.

We are ok until April 2027 thankfully but I am so worried about my SIL. Theirs isn’t up until end 2024 but they are already on the bones of their arses and if rates are huge then I honestly don’t know how they will survive.

and whilst that seems a long time away it really isn’t.

The Tories have totally fucked this one. I mean, IMF now making such a negative statement. Surely Truss needs to u-turn?!

Terrified as well. We stretched ourselves to buy a small house in a good area of our city not least because it is safe and close to the only good secondary school in the city. Extremely lucky to be able to do it at all. But since then, cost of food feels like its doubled, nursery fees increased, petrol, utilities, and the house needed more work than was apparent. The mortgage increases would cripple us. We are already extremely stretched and worn savings right down close to nothing.

We are having to consider fixing for 4 years and hoping we can get through it, or downsizing to a flat so we can stay in this area. The problem is that even a 2/3 bed flat here is oieo 450k.

We are highly qualified professionals, albeit I'm public sector. It breaks my heart to think of the mums like me on a lower income who must be absolutely terrified, if even we are scared now.

@MarinoRoyale thank you, I will

Mine is up at august 2024 and while I can afford 7% rates as I have been basically overpaying at least £1000 per month, 7% would be £1700. Does it make sense to pay ERC and fix my mortgage early at this stage?

I think having to act based on fact and evidence disspeared when we had the draconian extended Lockdowns, which has caused this mess.

The era of ultra-low interest rates and ever-increasing housing prices has just come to an abrupt halt. The quick fix is to print more money but that means more inflation and a falling pound which then means higher interest rates. One senior investment manager called the Tories a doomsday cult - sadly it's looking that way.

TIn the 1980s at the height of interest rates I was paying 12% for a while and had 2 lodgers and converted my through lounge into two rooms to cope with it and the value of my 3 bed semi in London went down around 20% and stayed down for a couple of years.

Are house prices going to crash?

Yes they are. Boom and bust

If they do the likes of you won’t benefit from it I’m assuming you don’t have a couple of million cash to scoop up the ill gotten gains.

but generally speaking once you have bought a house you shouldn’t look at whether the market is going up and down because it doesn’t affect you it doesn’t matter negative equity is only a problem if you can’t pay your mortgage so just make sure you can.

negative equity is only a problem if you can’t pay your mortgage so just make sure you can.

Now why didn’t we all think of that before?

Sarcasm isn’t very becoming dear.