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?

BBC news just talking of a 10%-15% drop in house prices as well as the high number of mortgage products removed from the market - nearly 1000 in a day.

Maybe not, but totally justified for such an inane comment!

"Just make sure you can pay your mortgage, that is £ssss more than previously, it really is that simple"

Honestly, talk about tone deaf!

They went up 20% last year though, so hardly a crash.

Everything feels so broken.

Make plans
Can you increase your income(2nd job)
Sell assets like 2nd car you don't need.
Consider a lodger.
Think about interest only mortgage
Extend mortgage period.

They won't work for everyone I appreciate.

How do you live with yourself, especially seeing what lies ahead for the people who trusted your advice?

It's only a few weeks since Liz Truss said that the idea of mortgage rates rising as a result of her policies was fear mongering Project Fear.

We bought in 2019. A similar property is for sale on our street. If prices dip 10% they will still be significantly higher than they were in 2019 here.

We bought in 2007 in a similar area. We sold for the 2007 value in 2019. It had only just regained its value. That was ok for us as it was better than renting. The issue was we didn't get a big equity gain to carry forward.

My point is that a dip isn't a disaster for most people. As overall the price will still be higher than they bought for so they won't be in negative equity so it won't be a barrier if they need to move. And if they don't need to move its largely irrelevant.

The problem for us is the dip will affect our equity come remortgaging next year. We were hoping to get into the next band for lower LTV but it will probably make us borderline now. So a fair incentive to over pay if we can to get a lower rate next time round.

I hear that the mortgage companies all withdrew their offers yesterday....the pound is so unstable even after the bank of England intervened yesterday, the pound is still plummeting.

Oh, thats alright then….

Maybe for you….

Agree - august is a little way away so don’t waste the next - revisit around May.

Just have to do what we all did in the 80’s get a second job, I used to finish work at four and start work in a bay at six.

Bar

I think folk are right, u should go to a broker. But I also think you may be right to be really concerned. Surely if it’s fixed, they can’t increase until fix end…

Ive been a mortgage owner for 30 yrs and seen rates at 14%. I fixed my mortgage during the 2008 crunch at 7.5% when the variable fell to 2% over a few years and i was stuck overpaying as th redemption fee wasnt worth it. I moved house in 2019 and got a 10 year fixed at 1.75 because my LTV was small. I feel relieved and i know this doesnt help everyone. My point is this is normal historic econmic patterns, people have just niavely believed it to be low forever and the newest owners are hurt the most

Some way to go yet! Our mortgage rate peaked at 15.4% for most of 1990. Then when we paid it off and had savings the rate fell to next to nothing for the last God knows how long! I'm glad to see rates climbing again. Sorry!

PLEASE READ AS THIS IS IMPORTANT AND COULD HELP TO SOLVE YOUR PROBLEM AT LEAST IN THE SHORT RUN: As this is your own home you are probably on a repayment mortgage - so there will be an element of capitaln + interest. When rates rise your overall repayment goes up but the capital element goes down. So say you borrow 200k over 20 years on 2% - your current repayment would be £853 - made up of £333 interest and £520 capital repayment. If you had to remortgage now at say 5% - then you would pay £1182 per month - but interest would now be £833 and capital would be £349. What you could look to do is fix for 3 or 5 years (depending on what rates you are offered and your outlook - i.e. will they go up on down from here) - and go on interest only - that way your repayments would not be much greater than what you are paying now. It does mean you are not repaying capital of course but with fixed rates you're allowed to pay 10% per year so if you have extra cash then you can make those payments if and when you have extra cash - but worst case scenario you keep your house and ride out the storm (effectively it's like renting your property from the bank for the fixed period of the mortgage with the option of making extra payments etc). That way you can withstand higher rates and still stay where you are. If you can make extra payments then over time you will bring down interest payments also. Banks will probably look to allow this rather than have to repossess houses for the foreseeable future - taking homes off people is never a good look. They are also allowing people to lock in rates 9 months before their mortgage change date rather than 6. Start talking to your mortgage provider now and see if they will allow you to move to interest only. And good luck! This government are a shower of idiots and I dread to think what they will do next.

Your not on your own OP mines due to end in July I’m worried sick. With everything going up we have very little to spare these days. We stress tested our mortgage a few years ago to however since then we’ve added DD and I lost a well paid job due to covid things are going to be tight I worry these price increase are not so able

There’s nothing you can do to control rates, so don’t stress unnecessarily. If you had a broker and they are worth their salt you’ll be contacted the maximum time prior to the rate ending and given all your options. If you went direct then find a decent broker. Depending on your lender will depend on whether you can prep your next interest rate 2-6 months in advance of end date.
do what you can control now, go through the bank account and end all non essential subscriptions, reduce and review contracts and packages, set a budget and stick to it, anything in the home that isn’t used anymore (clothing, devices, books, bags, dvd’s, etc) sell - even for minimal amounts it all adds up. Change your spending habits, socialise at home with friends instead of out, make lunch and take coffee to work. Try and build an emergency bills pot - you should always have 3 months bills in the bank for disasters. But whatever you do don’t stress, we are all really worried but at these times we can’t allow stress to make us ill.x

'30 years ago things were shit for me so I'm delighted to see it's going to be shit for other people now'

Well aren't you a fucking delight...

People have stretched themselves based on an historical low interest rate history and common sense would tell you it’s going to go up one day
I was there in late 80’s early 90’s
mortgage nearly doubled

YANBU. People are going to lose their homes. You are lucky you can afford to go to 8%. I don't know how we will do 5%. There is going to be a terrible mess, a massive decline in mental health including suicide attempts, and more people living in poverty. It would be a bit weird if people were not being scared.

Ah, bless you! Revelling in others miss fortune!

Maybe you'll need care and have to sell your home to pay for it? That would be just fitting for you.

And how much had you borrowed I wonder? And on one salary or two House? House prices have grown loads and you'll have no doubt done nicely out of it all. Mortgage debts are huge as a result for anyone buying more recently. Borrowing multiples and overall debt means analysts are saying that a base rate rise to 3% now is equivalent to your 14% back then. And some are predicting a rise to 6%. You'd have managed 28% would you?