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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

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:
Thread gallery
7
HintofVintagePink · 27/09/2022 19:38

GloriousGlory · 27/09/2022 18:43

@HintofVintagePink you are 100% wrong with your assumption about brokers stress testing...... but you carry on!

I didn’t say all brokers. I said good ones. So I will carry on, thank you.

Thistleinthenight · 27/09/2022 19:41

"It's all coming to an end. People are going to have to go right back to basics and in many cases this is going to mean some deep thinking into who and what we really are."

It just happened, did it? No, the Tories knowingly made it happen.

GloriousGlory · 27/09/2022 19:48

@HintofVintagePink the lender stress tests, not the broker..... so again you are wrong!

They stressed tested at a lot lower rate that is now needed.

But yeah you carry on!

Violashift · 27/09/2022 19:51

TheBoxOfWhat · 27/09/2022 15:56

Get in touch with London and Country, they are completely free, whole of the market mortgage brokers and are recommended by Money Saving Expert. Get their advice on your situation. Won't cost you a penny.

I highly recommend them.

www.landc.co.uk/

I found them too slow was going to take three weeks to go through a proper application. The estate agent needed a proper aip to take the house off the market. L and C initial one didn't count.

fortheloveofflowers · 27/09/2022 19:52

This is why I paid to come out by fix a year early. Got a 10 year fix at 2.4% which was worth paying the £1500 to come out early for.

I’d try and get out early. The info I read was it’s likely to sit around 6-7% in the future and may initially go higher.

NotAKnowitall · 27/09/2022 19:55

I remortgaged yesterday as my 3 year fixed deal is due to end soon. I've gone from £840 per month to £1093 per month. Cheapest I was offered.

I thought I had to remortgage last year so my broker found me a deal for £730 per month then discovered I had a three year fixed deal instead of a two year fixed deal (making me 1 year early). Oh how things have changed in less than 12 months.

Subaru4336 · 27/09/2022 19:57

This reply has been deleted

This has been deleted by MNHQ for breaking our Talk Guidelines.

@dane8 those on salaries of £150k+ are the ones no longer paying 45% tax, not those on £40k!

Blankscreen · 27/09/2022 20:01

The awful thing now is the housing market has been so over heated and in some areas there have been some ridiculous bidding wars and people over paying.
We were contemplating moving about 6 months ago and the broker assured me that £800k mortgages were quite normal round here.

Thank goodness we stayed put and if people have managed to fix for a decent time then all is ok but my friend added £300k to her mortgage in a 2 year fix and the old part of her mortgage needs renewing in January. She is very worried

Fingeronthebutton · 27/09/2022 20:09

Doodlebug is absolutely correct. I had my first mortgage in 1971 so I’ve seen a lot of action on the financial front.
At one point I thought we were in serious trouble with the mortgage. I went to my boss for extra hours. I told him the whole story.
He gave me wonderful advice: contact your lender ( and others) tell them your difficulties, offer to pay xyx. My mortgage lender reduced the amount I had offered.
Melody you will get through this. Just think, everything you do costs money ( well nearly everything 😄) so just for a while give everything, and I do mean everything you do, eat, bath, washing ( clothes etc) and see where you can go without or cut down.
we got to the stage where we cut out milk and used teabags more than once.
Thats when it’s bad 😂

RedToothBrush · 27/09/2022 20:10

altmember · 27/09/2022 19:22

I've had rubbish advice from my broker over and over as well. When I first took the mortgage he pushed me towards a 2 year fix (with £1000 fee), while I was expressing interest (no pun intended) on a 5 year fix. If I'd taken the 5 yr fix, it would have been coming to an end about a year ago, when there were deals about at 0.85% for 5 more years.

Instead, I've had the initial 2yr fix at a low rate, and then went for a 5 yr fix, which was significantly more (but still cheap by todays standards). And now when the 5yr term expires end of next year, sounds like it will be the worst possible time.

I also asked the same broker about refixing earlier this year (paying 2% ERC in the process). I'd ran the numbers and figured out it would still work out about the same overall cost, but 4 more years of security (in the face of rising rates). His advice was that he didn't expect rates to go any higher (as, in his own words, it'll screw a lot of people up financially), so again I followed his advice and am far worse off for it.

Even now, I'll still be better off refixing at the current rates, if they do go up to 5% next year. Up to 6% and fixing now gives a saving of over 4k over the next 5 years!

Fuck me, I'm kicking myself again for taking the supposed professionals advice over my own prudence.

Show quote history

TBH i personally don't trust financial advisors as far as I can throw them. We have a friend who has dished out advice to a bunch of our other friends. Advice based on certain details holding true. We both raised eyebrows at each other when friends told us what they had been advised to do. It didn't match the market trend and ignored massive historic lessons over what not to do. We thought it far from prudent to say the least...

...But DH and I are both extremely financially and politically literate and tend to see things coming a mile off before others and know why certain things have proved in the past to be pitfuls. Which most people aren't. The experience of my parents who were sold an endowment mortgage (on top of the car crash of 1989) taught me a hell of a lot. As did the crash of 2018.

I'd always say, do your own due diligence rather than placing blind faith and your financial future in the hands of someone else. Make sure you understand how compound interest works yourself.

We are looking forward and wondering what to do, and I'd say that the outlook for at least the next 5 years is bumpy. In a bumpy situation play it safe and fix your outgoings where you can to lessen your exposure to the unexpected. Even if it costs you more, its more manageable and less stress - and that in itself has value. Short fix rates and variable rates may play out better but the risk is too high for us. We want to know where we stand and thats the approach we will take.

And thats it, you have to consider what level of risk you are prepared to take and think of how you can insulate against that. Some people are more willing to gamble than others. We simply aren't because if it goes tits up we stand to lose more than we might gain. You can't ever look at this in terms of 'the cheapest' because there are no guarentees on that. You can only look at it in terms of 'what poses the greatest risk to me' and 'how much can I afford / not afford'.

I think people are going to get caught in the 'can't remortgage' trap more than the negative equity trap this time around. They also will struggle to downsize because they won't have the capital easily available to afford the fees to move, plus they may still struggle even to get a smaller mortgage and there's huge pressures at the bottom of the market due to the lack of affordability which further compound things. The future is likely to be interest only mortgages for a lot of people for the forseeable - that in itself stores up problems for the future.

None of its pretty.

andyetanotherschoolyear · 27/09/2022 20:11

Feel your pain, OP.

Someone may have mentioned already, but if you're not on one already, would you consider switching to interest-only for a while? Most allow a % overpayment each year.

Also, agree what others have said, most lenders offer to fix their deals six months before and, I heard on the news only this evening, some lenders are now even extending that to nine months.

passport123 · 27/09/2022 20:12

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 always fixed, good to have the certainty.
OP what's your redemption penalty - may be worth moving early

mellicauli · 27/09/2022 20:14

Do the maths: does the penalty you would incur for breaking your current deal outweigh the amount you would save by fixing for 5 or 10 years.

I did some calculations based on Nationwide mortgages. Cost of early repayment: 2.2k, savings compared to 6% average mortgage over 10 years 32.2k. So saves money, peace of mind

AuntSalli · 27/09/2022 20:14

Im not a broker but i work in a role where pushing people in a certain direction influences how much i get paid and i most certainly encourage people towards decisions in my interests not theirs. With brokers, the FCA loosely would ask why one product was recommended over another but still theres a wide margin.

Idontgiveagriffindamn · 27/09/2022 20:19

I’m aware this is helpful but I’m quite shocked at your current rate on a 2 year fixed rate. Even at the start of this year 5 and 10 year fixed mortgages were around the low 2% mark.
Do you have bad credit?

Babyroobs · 27/09/2022 20:19

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.

Yes we had our mortgage from 2002- 2016 and never paid less than 5 or 6 %

Silvertongue212 · 27/09/2022 20:21

It's unrealistic for most people who bought recently to stress test to 10%. I just had a look at 3 beds within 10 miles of my city. There are very few for under £300k and those that there are mostly need a lot of work and are in grotty areas.

Even if you had a substantial deposit of (say) £50k, 10% interest would be over £2272 per month for a 25 year mortgage. And that is for basically the cheapest family home you could buy. That is a huge amount, particularly given that childcare costs round here tend to be at least £1k per child per month.

The majority of people I know (I'm early 30s) live in small but very expensive terraced houses in very average areas and only bought in the last few years. And they are mostly working professionals.

I'm worried as my circumstances have changed and I'm now a single parent albeit with quite a high paying job. My house is just about affordable at current rates but I'd have to sell the house at 6 or 7%.

That said, I can still get a 5 year fix at 3.5% at the moment. If banks genuinely thought interest rates would average over 7% for the next 5 years they wouldn't be offering this product. Of course they may be wrong and interest rates could well be over that for a period but I'm slightly reassured by this.

Per1w1nkke · 27/09/2022 20:24

You apparently need to earn 70k for highest earner or 100k for joint for interest free. It’s a massive gamble paying penalty fees and moving now.

Its looking horrific. Tories just don’t care.

GloriousGlory · 27/09/2022 20:30

Per1w1nkke · 27/09/2022 20:24

You apparently need to earn 70k for highest earner or 100k for joint for interest free. It’s a massive gamble paying penalty fees and moving now.

Its looking horrific. Tories just don’t care.

Absolutely rubbish, virgin money do £75k joint!

You really should not be giving advice when you know fuck all!!

ScotsLassie322 · 27/09/2022 20:32

Silvertongue212 · 27/09/2022 20:21

It's unrealistic for most people who bought recently to stress test to 10%. I just had a look at 3 beds within 10 miles of my city. There are very few for under £300k and those that there are mostly need a lot of work and are in grotty areas.

Even if you had a substantial deposit of (say) £50k, 10% interest would be over £2272 per month for a 25 year mortgage. And that is for basically the cheapest family home you could buy. That is a huge amount, particularly given that childcare costs round here tend to be at least £1k per child per month.

The majority of people I know (I'm early 30s) live in small but very expensive terraced houses in very average areas and only bought in the last few years. And they are mostly working professionals.

I'm worried as my circumstances have changed and I'm now a single parent albeit with quite a high paying job. My house is just about affordable at current rates but I'd have to sell the house at 6 or 7%.

That said, I can still get a 5 year fix at 3.5% at the moment. If banks genuinely thought interest rates would average over 7% for the next 5 years they wouldn't be offering this product. Of course they may be wrong and interest rates could well be over that for a period but I'm slightly reassured by this.

Where are you seeing a 3.5 interest rate?

Jmaho · 27/09/2022 20:34

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.

Assuming the mortgage was joint previously and you are now on SVR rate with the same lender I think you have a case here
I work in mortgages and this is piss poor. Forcing you onto a higher rate due to the death of your husband. This is something that the regulators would have a field day with
Send a complaint letter by recorded delivery clearly stating your issues and what you want them to do about it. Let them follow their complaints process and if you're not happy with their response take it to the Ombudsman

GloriousGlory · 27/09/2022 20:34

@Silvertongue212 please link your 3.5% interest rate

KLFisgonnarockya · 27/09/2022 20:34

oneuptwodown · 27/09/2022 19:37

I feel so badly for people just starting out, with no knowledge or experience of anything other than cheap money and a stable economy (realistically, anyone under around 45yo). I feel for people who have to choose between a roof over their heads and childcare - impossible choice, especially when you already have two working parents already run ragged (let alone single parents, or parents of children one or more of whom have extra needs, or non-parents with other dependents). I feel for people trying to estimate how much their gas and electric will go up, food and fuel too, then just not bothering calculating how much their mortgage repayments will increase because they'd already be under water.

We have lived through an unprecedented time of cheap money, choice in everything, relatively low unemployment, easy access to expensive and often useless higher education, excessive pressure from all quarters to consume consume consume. It's unbelievable now to think that things like a coffee and pastry on the way to work and a sandwich meal deal, instagram-influenced purchases for ourselves or our homes, weekend city breaks and two week summer holidays abroad, deliveroo meals, expensive hobbies, upgraded cars, multiple tv channels...these were all accessible to most with relatively little pain. All at a cost to our mental health, the environment, our social cohesion and often making indelible inroads into our identities and what we think life is all about.

It's all coming to an end. People are going to have to go right back to basics and in many cases this is going to mean some deep thinking into who and what we really are.

Or….if you don’t want to follow the above smug advice…

we can just storm parliament and overthrow that bunch of useless, thieving cunts.

Per1w1nkke · 27/09/2022 20:36

My Dh rang our lender today and was told it had been industry standard for a while now.-confused- Virgin have suspended all mortgages at the moment. 70k is still a lot more than many will earn jointly anyway.