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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?

OP posts:
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Am I being unreasonable?

1325 votes. Final results.

POLL
You are being unreasonable
13%
You are NOT being unreasonable
87%
knickersniff · 27/09/2022 16:31

Can you afford to over pay now

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toomychtiss · 27/09/2022 16:31

'm really sorry about your husband but didn't you have life insurance to cover you in this situation? I thought it was something lenders insisted on.

Tbf to that poster perhaps life insurance was too expensive or not possible. I know someone who had cancer young & couldn't get life insurance. Lenders don't insist on it.

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SareBear87 · 27/09/2022 16:32

YANBU
I'm in the process of divorce, when we did the stress test in 2018 it was based on 2 FT earners. When he walked out 8 months after buying he refused to pay a penny. The deal ends next May, I've paid 100% since. I can afford the current rate but no way can I afford a potential 6-10% rate on my own.
I don't dare overpay (as he'll be entitled to half the profits & is already insisting on half the equity as it is) So I'll just have to move - which is heartbreaking.

I'm just praying rates stabilise early next year!

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SerendipityJane · 27/09/2022 16:35

I'm in the process of divorce, when we did the stress test in 2018 it was based on 2 FT earners. When he walked out 8 months after buying he refused to pay a penny.

So where one house was needed, now 2 are*. Writ large that's why house prices ain't going down.

*(Admittedly a touch over simplified).

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boobot1 · 27/09/2022 16:36

I fixed for 5yrs in August at 2.59% thank god!

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Caroffee · 27/09/2022 16:37

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.

I'm mid-40s and although I'm not old to have paid high interest rates on a mortgage, I am old enough to remember them.

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caffelattetogo · 27/09/2022 16:42

It is very worrying. But could there be an option to switch to interest only for a few years?

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Whatevergetsyouthroughthenight · 27/09/2022 16:44

I lived through 15% mortgage interest rates in the 1990s, paying the mortgage on my own, yes it was scary.

I got a lodger to help out and was basically skint for a few years. However, it shouldn’t last forever. If you are struggling speak to your lender asap. They had to put plans in place in the 1990s and they will have to again. Don’t wait until you are missing payments, if you are genuinely doing your best they will be much more sympathetic than if you stick your head in the sand.

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Eastangular2000 · 27/09/2022 16:44

caringcarer · 27/09/2022 16:22

@melodypondisasuperhero, no rate to leave a mortgage fix decreases each year. If you fixed for 5 years and wanted to leave in first year it would be very expensive but if you are in your final year of fix less expensive. However a good broker will check it all out for you seeing if it would be cost effective or not. My gut feeling is to fix for 5-10 years now. I think next Spring/Summer mortgages will be astronomical. I say this as an person who once had to pay 12.6 percent. The thing is mortgages have been so low for so long many people have never known high mortgage rates and the misery it causes. So many defaults.

The rate does not necessarily decrease each year of this fix, it totally depends on the product.

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Eastangular2000 · 27/09/2022 16:46

boobot1 · 27/09/2022 16:36

I fixed for 5yrs in August at 2.59% thank god!

Such a helpful contribution to the thread.

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warofthemonstertrucks · 27/09/2022 16:46

Yep we are going to really struggle too. I'm so fed up. This bloody cretinous government.

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SerendipityJane · 27/09/2022 16:50

warofthemonstertrucks · 27/09/2022 16:46

Yep we are going to really struggle too. I'm so fed up. This bloody cretinous government.

That's democracy for you.

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Wishyfishy · 27/09/2022 16:51

NameChangeLifeChange · 27/09/2022 16:14

Im Sorry OP it’s crap isn’t it. I know lots of people say it’s inevitable, we should have been prepared etc etc but almost everyone I know is mortgaged up to the eyeballs (early thirties) and shitting themselves. This is, by the way, due to high house prices rather than lavish lifestyles we certainly aren’t all in 4 bed detached houses wirh large gardens!
We remortgaged 3 months ago- had to pay a £1500 ERPC but we were worried about increased so did it. We had to stay with the same lender as we didn’t pass affordability (I’d reduced hours and second child so huge childcare costs) since the last time so we had to avoid being reassessed! We are desperately hoping things have calmed in 5 years and with both kids in school and better salaries we will have more options.
Scary times though and don’t be made to feel stupid or excessive for having a large mortgage. It’s the sad reality for most young people.

Yes to all of this. I live in London. It’s expensive. It’s not because people are being flashy that they have big mortgages - it’s because buying any kind of home is bloody expensive.



Not sure if it helps but to everyone, please remember that fixed mortgages rates are not based on where the BofE rates are now but the market expectations of where they’re going to go over the course of the following years. If things stay as they are and base rate goes up as planned and peaks at the expected rate next year (and then goes down a bit again - is the market assumption) mortgages rates shouldn’t actually move much. They’ve moved a lot over the last few weeks simply because market expectations changed. Another 1% increase doesn’t mean that mortgage rates go up 1%, it depends on whether that 1% was already expected.

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Mouseaboutthehouse · 27/09/2022 16:56

I am feeling the same. We are still in our first house, which most would consider a starter house, two bed terrace. Most of our friends moved onto new homes but we decided to stay small and have more money for other things. We also did checks to see if we could afford higher rates.

I don't think we could have foreseen the huge rises in food, petrol, energy. In fact in everything. Even things as small as parking at work, it is now more expensive than before covid, even if working from home some times. I'm scared. We have been saving each month for the hikes in energy but it we are talking several hundred pounds more, then what's the point.

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Bunnycat101 · 27/09/2022 17:03

You need to run the numbers and see if overpayment would be better or savings to tide you over if the rate rises.

You need to run the numbers and see if overpayment would be better or savings to tide you over if the rate rises.

eg on a 300k mortgage over 25 years at 3.09% your monthly could be 1436 with remaining debt at 291,991 after a year. If you overpaid by £300 a month the debt would reduce down to £288,260.

if you then remortgaged with those balances at 5% next year for 24 years the monthly payment would be £ 1,744 v £1721. Given the small monthly difference, you might be better keeping the hypothetical £300 overpayment (£3600 over the year) as a buffer to help with the difference in monthly payment in the short term.

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ChateauMargaux · 27/09/2022 17:11

We have bought 4 properties over our lives together and EVERY SINGLE TIME we have thrown everything at each one, emptied savings to have the biggest deposit and stretched to get the best possible mortgage and a house that best fit our needs and desires - truthfully - we could have bought smaller houses on all of those occasions but each and every time, there has been a period of terror afterwards (I am married to a cool customer while I think of the worst case scenario - also I was working in a decent career when we bought the first two properties, for the second two, I was and continue to be in a much less strong position to help dig us out of a hole if required which does inform the feelings of insecurity around money.).

But no - you are not being unreasonable to feel like this.. it is normal and in the current financial climate, also a very logical fear.

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Trez1510 · 27/09/2022 17:17

MysteriesOfTheOrganism · 27/09/2022 15:52

I remember the early 1980s when our mortgage rate went up to over 16%. It was a truly dreadful time. I really feel for everyone who is getting seriously worried right now.

I too remember those days. Dreadful, grim, mental-health wrecking (although we didn't really acknowledge the mental health impacts in those days).
We survived only because I'm extremely fiscally risk averse and had overruled my (now) ex-husband who was all for maxing out in the same way most of our friends had done.

Even with my extreme restriction on what we should borrow (excluding my salary, not including his regular bonuses etc.) times were soooo tough for us.

IIRC, there was not the additional pressure of spiralling/out of control CoL costs. Even then, a lot of our friends had incredibly difficult times both financially (redundancy, unexpected pregnancy etc.) and emotionally (stress, shame at not being able to meet mortgage/other debts etc.)

At least now lenders afford some breathing space, look at options to keep people in their houses. Back then, AFAIK, you missed a couple of payments and the house was repossessed.

I hope we never see the likes again.

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dane8 · 27/09/2022 17:17

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Notallthosewhowander1 · 27/09/2022 17:18

We have paid the ERC to get out of our fix which ends in June. It cost 1% of the balance which is about £2k, we worked out over a 5 year fix this would make us better off still.

Our lender TSB said lots of people are doing this. They have changed their policy so we can reserve the rate now until January and are only committed once we sign the paper work. So we shall do this in December to keep a couple more months at current rate, which is low. The rate was 3.5% on a 5 year fix. We also overpay the max amount which helps.

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Ahbisto · 27/09/2022 17:20

I think it will be fine by then,

these threads remind me of the Covid threads where it was Armageddon.

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Kennykenkencat · 27/09/2022 17:20

Whatevergetsyouthroughthenight · 27/09/2022 16:44

I lived through 15% mortgage interest rates in the 1990s, paying the mortgage on my own, yes it was scary.

I got a lodger to help out and was basically skint for a few years. However, it shouldn’t last forever. If you are struggling speak to your lender asap. They had to put plans in place in the 1990s and they will have to again. Don’t wait until you are missing payments, if you are genuinely doing your best they will be much more sympathetic than if you stick your head in the sand.

Looked at paperwork a couple of weeks ago and mine was 22%
It was horrendous times
Ours didn’t fall when BOE put its rates down as the bank put the amount up by that amount.

Until after several months of complaints and waving our mortgage T&Cs at then they suddenly understood what we were saying and changed it.

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NAME3CHANGE · 27/09/2022 17:22

Yep similar problem

well in that I’m worried

good news is we only have 60k left on ours , but as we are a low income family much difference will cause problems

I’ll do everything I can , hubby regularly hits 50 hours at work and I normally manage about 30 with overtime.

it won’t last forever, just seems it !

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Softplayhooray · 27/09/2022 17:23

Woodsparrow · 27/09/2022 14:49

Is it normal to fix for 2 years on a first mortgage? Genuine question I've never known anyone do that

Anyway, how soon can you start looking at fixing further?

We did this, a long time ago though.

I'm very worried too OP I read that mortgage payments might rise by 50%!!! How the hell will people live?

Kwarteng must be the most useless Chancellor in history. We need a GE. These people are utterly reckless incompetents.

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lannistunut · 27/09/2022 17:25

Whatevergetsyouthroughthenight · 27/09/2022 16:44

I lived through 15% mortgage interest rates in the 1990s, paying the mortgage on my own, yes it was scary.

I got a lodger to help out and was basically skint for a few years. However, it shouldn’t last forever. If you are struggling speak to your lender asap. They had to put plans in place in the 1990s and they will have to again. Don’t wait until you are missing payments, if you are genuinely doing your best they will be much more sympathetic than if you stick your head in the sand.

The situation is much worse for many people now, so those who lived through the old days need to not compare directly.

People are much more exposed financially due to how high house prices are in the first place.

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sarahc336 · 27/09/2022 17:25

If you speak to a mortgage broker they can work out if you'd be better off paying to leave the mortgage early now and then secure an interest rate available now, it can be better to look at doing this if you would struggle to afford your mortgage if the rates went a lot higher x

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