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AIBU?

To be terrified about mortgage

633 replies

melodypondisasuperhero · 27/09/2022 14:47

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?

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Am I being unreasonable?

1325 votes. Final results.

POLL
You are being unreasonable
13%
You are NOT being unreasonable
87%
Icanstillrecallourlastsummer · 27/09/2022 15:12

Eastangular2000 · 27/09/2022 15:10

She is more than a year out, she can't start the process

Sorry, misread.
It's worth to look at the early redemption fee then. A lot of them used to be depreciating, so lower closer to the end of the term. It might be worth getting out and fixing now, depending on that fee.

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FrownedUpon · 27/09/2022 15:12

ChiefWiggumsBoy · 27/09/2022 15:04

You can probably already move, it tends to be 3 months before.

November 2023 is over a year away though. Overpay as much as you can before next year and start to look at new deals in May.

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fromdownwest · 27/09/2022 15:12

Most lenders have pulled all of their rates today, to be re issued tomorrow. Looking like there will not be many 2 or 5 year fixed rates that don't have 5 in front of them.

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Allicando · 27/09/2022 15:14

melodypondisasuperhero · 27/09/2022 15:07

Sorry if this is a stupid question but is the exit fee from the fixed term the same as the fee for repaying your whole mortgage early? Because I’ve just had a look and that sum is eye-watering.

Yes it is, you will be paying the early redemption charge on the whole loan amount if you come out of it early and pay the % set out in your mortgage T&Cs.

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OnlyFoolsnMothers · 27/09/2022 15:14

melodypondisasuperhero · 27/09/2022 15:07

Sorry if this is a stupid question but is the exit fee from the fixed term the same as the fee for repaying your whole mortgage early? Because I’ve just had a look and that sum is eye-watering.

Yes, its a percentage that goes down the closer you get to the deal- so mine next year is costing me just shy of £1500

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TangoWhiskyAlphaTango · 27/09/2022 15:14

This is absolutely going to a nightmare for so many people, borrowing has been so cheap for so long that many of us (inc me in my mid 40s) that we havent really had to think about rates / cost of living rising like this. So many people live very close to their means that this will push them over the brink, even on good wages. I hate to think what will happen.

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GertrudePerkinsPaperyThing · 27/09/2022 15:16

I’m terrified too. I’m a single/ divorced parent and had to buy a property which stretched me quite a lot - and subsequently have work done to it - when I left my exh. Needed to stay in quite an expensive area due to kids schools / where exh is.

Im a public sector employee and my pay as not kept up.

I’’ sure people would say “oh you should have stress tested to x %” but in the real world we have to do what we can to house our children.

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Nowheretoogo · 27/09/2022 15:16

Same boat op,ours runs out November 23,we were stress tested but absolutely everything has gone up,there isn’t much left now!..bricking it..ftb too

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Adelais · 27/09/2022 15:17

Our fixed rate ends next July and my OH is being made redundant soon so very worried.

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GertrudePerkinsPaperyThing · 27/09/2022 15:17

TBH I really judge people who are unsympathetic about this, as I think “people are doing their best for their families, why judge that?”

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GertrudePerkinsPaperyThing · 27/09/2022 15:18

I judge those who are deliberately or recklessly destroying the economy and their disaster capitalist mates

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melodypondisasuperhero · 27/09/2022 15:18

I’ve requested to go full time at work which will mean doing some work after picking 6-year old up but oh well. If it’s approved I’m planning to put all the “extra” each month into overpayment but with the mortgage being so new still I don’t think it’ll chip away a huge amount. 😬

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PosiePerkinPootleFlump · 27/09/2022 15:18

I'm not convinced it would make sense to pull out of existing fixes early now.

The rate a bank will offer you for a future fix depends not only on what the Bank of England base rate is now, but what the lending bank thinks it is going to be over the fix period. You can't 'get in early' if the lender also expects interest rates to go up.

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Eastangular2000 · 27/09/2022 15:19

OnlyFoolsnMothers · 27/09/2022 15:14

Yes, its a percentage that goes down the closer you get to the deal- so mine next year is costing me just shy of £1500

It doesn't always go down, ours is the same for the whole of the fixed rate period

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fromdownwest · 27/09/2022 15:19

BOE is using a sledgehammer to crack a wallnut.

Housing has not caused this inflation, it is driven by utilities, food and services.

So crippling households, to reduce inflation is insanity. People will have less to spend yes, but they will still have to pay their eye watering prices for gas and electricity.

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OnlyFoolsnMothers · 27/09/2022 15:19

Eastangular2000 · 27/09/2022 15:19

It doesn't always go down, ours is the same for the whole of the fixed rate period

Oh sorry didnt realise, thought they were always staggered

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HintofVintagePink · 27/09/2022 15:20

Butterflyfluff · 27/09/2022 14:58

A decent broker will check you’re still comfortable at affording 10% before arranging lending.

a) That isn’t true
b) That isn’t helpful

a) Yes it is
b) Subjective

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peachgreen · 27/09/2022 15:20

Yup. My fixed rate came to an end and I couldn't get another mortgage because my husband had passed away so I was now a solo borrower. Had no choice but to go onto the variable rate which doubled the payment and it's increased further every month. I'm having to sell the house, go into rented and attempt to downsize.

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melodypondisasuperhero · 27/09/2022 15:20

@PosiePerkinPootleFlump I’m hoping you’re right but looking at my banks website they are offering a 5 year fix for <5%. I really want to believe they’ll still be offering that in August but it seems unlikely.

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Blahdeebla · 27/09/2022 15:21

Your overpayment will come off the balance not interest. So you will chip away, i think this is your best plan of action and to also add any equity you can so that when you remortgage your house will be worth more.

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DoodlePug · 27/09/2022 15:21

What are you actually worried about?

Is it that you will have to cut back to pay the mortgage, will struggle to pay it, won't be able to pay it?

Or are you worried about being chucked out on the streets?

The latter is highly unlikely, if you've a good chance of being able to pay in future your bank would rather you made reduced or interest only payments, extended the term, etc.

Really try not to panic, ensure you know where you can cut back on spending and do what you can to get more savings built up. Plan for a variety of future scenarios then try to accept you've done what you can and don't give it any more head room until you have new information.

See what the earliest point you can agree a new fix is. It's not uncommon for buying a house to take months so you may be able to agree a mortgage in principal now which starts when the old one finishes.

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Icanstillrecallourlastsummer · 27/09/2022 15:21

GertrudePerkinsPaperyThing · 27/09/2022 15:17

TBH I really judge people who are unsympathetic about this, as I think “people are doing their best for their families, why judge that?”

Me too. It's a shit situation. While it's not sensible to have taken out a HUGE mortgage unable to afford any increase, noone could really have foreseen the circumstances that have led to a relatively quick rise. Normally you'd only see smaller incremental increases, not 3% in less than 6 months as we are looking at now. In fact before the war there was every indication that BoE was acting very slowly with any rate rises to avoid too much stress on the economy following covid. People will have acted on the information they had, that doesn't make them idiots of irresponsible. Many will not have had much choice had they wanted to buy.

FWIW, our first mortgage was only fixed for 2 years. That was pretty standard for what was advised at the time. The rate was high too, around 5.5%. Each time we remortgaged it came down, so fixing for 5 or 10 years would have been stupid.

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melodypondisasuperhero · 27/09/2022 15:23

@DoodlePug Thank you, your post was actually really helpful. I’m of the “catastrophising” mindset so the train of thought definitely goes to interest spirals out of control to a point where we just can’t pay - become homeless. So it does help to be brought down to Earth a little 😅

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Wideawakeandconfused · 27/09/2022 15:25

You can fix a new mortgage rate in 6 months before remortgage is due so if it’s up for remortgage in August, start speaking to a good broker in March next year.

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Trees6 · 27/09/2022 15:28

If you remortgage to a new lender, are you obliged to use a solicitor to complete the process?

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