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?

We don’t have takeaways. I have to have the internet because I work from home 2 days a week, and it’s fairly difficult to manage nowadays without a mobile phone (mine is £10 a month, SIM only). No satellite TV but I do splurge £10.99 a month on Netflix. Haven’t had new clothes for years but I have to clothe my growing children (mainly secondhand).
However since buying our house gas and electricity has risen in cost hugely, our nursery bill has increased by 20%, petrol, food etc has gone up… so yes, the increase in interest rates on our mortgage is going to be hard to absorb.

I’ve read this entire thread hoping I’d somewhere find the answer to why this first poster was so surprised about FTBs getting fixed rate mortgages.

over 150k got a 5% tax cut not over 40k 🙄

I was surprised that wasn’t obvious too.

Generally FTB have very high LTVs so aim to get down to the next bracket (usually 5% increments) and remortgage after 2 years hoping for a better rate - why would you want to fix for a long time with a high LTV?

New fixed rates are going to be high. Batshit crazy loonies in charge. Lots of cheap repossessions for their property chums to buy up.

I lived in Australia for 25 years, came back home and seen the house prices.
OMG/ I was shattered.
Now that every bill and fuel has gone through the roof........how are people surviving? Don't get loans, mortgages or cars.
Absolutely insane. If you don't pay for things, the prices drop, because they are not making any money.
Stock up now, with your food and alcohol,soft drinks and when its December.......you have enough food and drinks for a month, the supermarkets will be empty.

Do not panic. You can often go on an interest free rate if you are struggling. Also remember that you can ask for a mortgage holiday for a couple of months. Banks will want to work with you.

Also do not vote Conservative for the next 20 years

You could always do an interest only mortgage if you have to? Do you have a spare room? Get a lodger? There are ways to make it work. Let’s hope we get rid of this government at the next election, they have made such an unbelievable mess of things in this country.

Get a lodger?
You obviously have no idea about eviction rules.

I only pay £6.99 a month Netflix.....you need to look into that.
£10 a month for mobile is cheap but, get on a plan for unlimited, i'm with EE and get unlimited WIFI and mobile for £25 per month.
It sounds expensive but it's unlimited.
Also, go to charity shops for clothes, choose the shops in rich area's then you get quality. Speak soon, keep it real and take care. x

It’s more than a year in advance?

A sensible approach given an unprecedented all time and long low interest rates would be to fix for the longest time possible. Base rate could not drop any further but obviously could and would increase. Any offset against reduction of rate against LTV leverage would be minimal in comparison.

i feel a lot of ‘new and perhaps younger ‘mortgage advisors have given ill advice given they’ve never experienced anything other than low rates.

Ii am Singaporean and sorry I hate it when people compare this bunch of loons to Singapore. Singapore is not perfect and the government has a lot of shortcomings but it builds subsidized housing that it sells to its population. this means that most 'ordinary people'(85%) are shielded somewhat from the free market. When my aunt's husband died early, my aunt had a government mortgage and half her mortgage was forgiven (on a discretion basis). Yes it is 'free market's in terms of low taxes and lack of unemployment benefits, but the state is interventionist in other ways that help the middle class and low income survive. The state owns 95% of land in Singapore which is why they can afford the low income taxes and still have money to run services and not have a deficit, most government revenue is made from selling the land on long leases to corporations but then eventually being able to get the land back so there is consistent revenue. There are high taxes on things like cars (which are consumed mainly by the rich/upper middle class as Singapore is a city with world class public transport so most people don't have a car). This is very different from the UK, where such a huge percentage of government revenue is dependent on charging income taxes on the rich. We also have a sovereign wealth fund so therefore we are not constantly having to depend on tax revenue to fund rising costs. UK doesn't have a sovereign wealth.

Lastly, Singapore does not get warnings from the IMF.

I'm sorry.......can you simplify your message please, instead of being a book!

. Mine went up from 15 to 17.5 per cent in the 70s. We just cut back on new clothes and bought cheap and cheerful food. No takeaways, no internet, no satellite tv, no mobile phones, so not the outgoings people have now
my parents were hit by this in the 70’s and early 80’s. They couldn’t sell the house as there was no one able to get a mortgage to buy it. They couldn’t walk away to a council house because the reason they bought in the first place was that they couldn’t get a council house. I’d go so far as to say the worry and the stress on their relationship ruined my childhood. One year at Christmas they sold my toys to make a payment. The really sad thing was that I understood why they needed to do this and pretended I didn’t mind. I was an adult before my time. I had no new clothes ever. First lunch in a cafe at 10 - never eaten outside the house before then. Can think of a further 3 occasions when I did this again in the 6
years after that. Never went on a school trip and was marginalised at school where a lot of kids lived in council houses, had stable accommodation and could afford the things that my parents could not. I share this because this was not a good thing then and it’s not a good thing now My mortgage in the mid 90’s was 8% and I did my own stress test up to 15% to work out what was affordable. I’ve stayed on fixed rates, for the past 25 years and paid way more than I needed to have done because the memory of the 70’s and 80’s was strong in my mind. Economic instability is bad for everyone. I don’t want to see families homeless or wracked with worry.

It is very difficult. In the 80s too we had rates rise to 17%.We locked in at 13% for 10 years at one point and then rates went lower (so hard to predict then as now). I remember the day rate for 5% 9 first 2% and then 55 on the same day known as Black Wednesday and we had borrowed 4x my salary - much more than people usually were allowed in those days and had an interest only mortgage plus some was "deferred interest" meaning the mortgage allowed you to add some of the interest in the debt. What a day that was although rates then went down a bit.

It is never easy to compare times and how things were though as different ages are so different eg I worked until I went into labour and back full time at 2 weeks (not months) as nothing else was affordable and that kind of thing.

We’ve just booked a rate two weeks ago, with a view of buying ourselves out of our current mortgage that expires in July. Now I can actually sleep at night.

The current financial climate is utterly terrifying. We might as well have toddlers in charge.

And equally back in those days if somebody was repossessed they will be moved into a nice council house that met their accommodation needs within a matter of days.

Two friends had their houses repossessed around 1990/91. Neither of them got council houses.

The council helped one friend get a private rented place, but they spent a few weeks in some sort of temporary accommodation where they had 2 rooms for two adults and three kids. She's still renting privately more than 30 years later. She sometimes wonders how much she owes the building society now, as they were massively in negative equity.

The other moved into her widowed mum's tiny 2-bed terrace with 2 kids because the council wouldn't help her. They were so crammed in, friend had to sleep in the living room. Then her mum sold the house and they bought a bigger house together, and she lived with her mum until her mum died a few years later.

It was an awful time, and it makes me so sad that people are having to face the possibility of this happening again.

@LakieLady what a load of nonsense… after 12 years at the time 1990 the debt became statu barred, these days it would be 6 years.

Even in London council housing was readily available in 2000.

who else is there to vote for!?

I’ve got a fixed mortgage until March 2025 at 2.34%. Loan of £80k on a £140k property. I’ve just gone in to Nationwide and they are offering a fixed rate for 10 years at 4.4%. I don’t know what an early repayment fee would be tho. A lot I would think as still over 2 years to go. It’s difficult to know where rates will be in 2 years time but I’m thinking more than 4.4%. I am taking the good advice from a PP and paying off as much as I can in the next 2 years whilst also trying to have 3 months wages in savings. Basically I won’t be going out for the next 2 years! How can I save, pay extra on the mortgage AND the COL? It’s nuts.

No not ever - even at the end of the world as you breathe your last breath raise your dying eyes to the sky and say at least upon this brief journey of life I NEVER voted Tory. Commie Jesus will greet you with open arms...

Then Jesus said to His disciples, “Truly I tell you, it is hard for a rich man to enter the kingdom of heaven. 24 Again I tell you, it is easier for a camel to pass through the eye of a needle than for a rich man to enter the kingdom of God.”

@AuntSalli I don’t know about council housing in London but I would concur with @LakieLady re: council house availability. My parents, exiting the
military, could not get one in the late
60’s and early 70’s. House prices in London surged way before 2000 and there has always been a big issue with homelessness in the capital. I’m surprised council housing was readily available then.

I think having lost a house, many people were too scared or too old to contemplate taking on another mortgage.

Buy something, however humble , in as good an area as you can afford .
Avoid Ex Local Authority places, ( see other threads on that)
A friend is buying again- he just lost out on stamp duty cut by a week!
But one has to live somewhere- so better off owning rather than renting.