How can people afford to remortgage

[Tead]

I have a £200k mortgage. When aI remortgage I will end up paying around £500 a month more. I can just about manage I think although there will be nothing left at the end of the month and we might need to go into our savings.
how would people who are just about coping deal with an increase in monthly payments

My point is younger people have only known rock bottom rates and not really taken on the seriousness of planning ahead for the inevitable rises.

I really hate this idea, and particularly blaming younger people for daring to try to own a home.
At a time when housing costs are insane compared to incomes, the possibilities of secure council rent is a dream long gone but fuck them for wanting secure housing and trying to buy a home.

Why is everyone so happy to ignore that the fact that the problem is the almost over night interest rates? I fixed a part of my mortgage recently, 1 but is on 1.3% and the best rate mere months later is 5.7%! And that is on 60% LTV. God help people who haven’t paid much down after buying with a 10% deposit recently.

And everyone is forgetting that 16% interest on a significantly cheaper home relative to the average income at the time is less than 6/7% interest on the cost of housing today. And that is before you consider the fact that interest was tax deductible so no one was actually paying 16% interest!

My point is younger people have only known rock bottom rates and not really taken on the seriousness of planning ahead for the inevitable rises.

🙄

My point is younger people have only known rock bottom rates and not really taken on the seriousness of planning ahead for the inevitable rises

There is also the impact of much larger mortgages relative to income so interest rate rises will have a large effect on repayments relative to income compared to the past.

But of course, in the past, interest rates did go up to high levels.

why does everyone criticise the "feckless" younger generation for buying expensive homes? I'm sure they would have liked them to be cheaper!

I know right, when someone ‘chooses’ to spend over £350k on a small flat it’s should be met with pity, not some sort of high and mighty nice judgement.
The alternative is actually spending more money on monthly rent, with unstable short term leases. What exactly have young people done wrong other than being born at the wrong time?

No one group has the monopoly on struggling. Mortgage payers and renters are finding it tough. Age is irrelevant. Not every boomer is wealthy.

The only thing I'd say is that having been reared in the 50/60s and a young married in the 70's, is that we have ALL got used to cheap food. Decades ago, it took a bigger proportion of income that it did now, until recently.

I suppose the EU just negotiated good trade deals, but we have now left , and costs have rocketed. Plus the war and global supply chain issues have played a part.

There's not much anyone can do other than ride it out. It looks as though the budget will be grim news, in regard to tax, benefits and cutbacks.

Hopefully, if inflation starts to fall next year, everyone will be better off.🤔

Stress testing only shows finances for a brief window of time, so I'm not sure what it achieves. People's circumstances change. We were stress tested to 7.5% when we bought our first home in 2018. Since then we've had 2 children. So that means 2 x maternity leaves, 2 x childcare fees and I've reduced my hours.

People may have had job loss, carer's responsibilities, relationship breakdown, illness or bereavement to cope with since they bought their home, and yet some people on here will still look smugly on as they struggle to cope with the rises.

Really sorry OP. This is an utter crap show and despise the government for exacerbating the situation via KK's mini statement. It's screwed so many people over and know loads of people who will be shafted by this.

There are some mitigating steps that you can take however. It might not be enough (most likely) but will help.

Sorry I've not read the whole thread but if you can afford to pay an additional £500, then do it now or put it aside. If you have savings then either consider lumping this into your mortgage when you remortgage. If you want to maintain liquidity then look at offset mortgages. Rates might be higher still, but at least you'll receive this rate on your savings.

Look to cut back on everything and clear down as much of your mortgage as possible. This is what we're looking to do. It's not going to be pleasant over the next few years but none of us need a mortgage hanging round our necks whilst the markets are all over the place.

No one group has the monopoly on struggling. Mortgage payers and renters are finding it tough. Age is irrelevant. Not every boomer is wealthy.

Of course not every boomer is wealthy, who has said that. But there is huge inter generation inequality regarding hoisting costs, why not deny it?

the BOE are rate takers from the FED. nothing more, nothing less. UK can't afford a weak GBP

They’ve got us good this time. Everyone will be so busy trying to find money for the mortgage, that they won’t notice the 20% fall in house value. A real double whammy.

There are plenty of us who are homeowners and who'll have no problem at all with a fall in house prices, mind.

Presumably because mortgage free?

i'm not mortgage free but I want to upsize at some point. How do ever increasing prices help me?

Nope, I have a mortgage razzle. Actually I was thinking of homeowners with mortgages when I typed but I realise now that I should have made that clear, because obviously people with mortgages and without are different cohorts.

I paid £2k ERC to remortgage on low 5 year fix back in March. I calculated it would work out in my favour - even if rates didn't dramatically increase I would be no worse off in 5 years by paying the ERC. I was looking at my fix ending Jan 23 and was very worried.

I'm now trying to overpay as much as possible for the next 4 years while I'm on a low rate. My only "regret" is not taking the 10 year fix that was offered at around 2%.

Exactly, in 2018 I was stress tested to 4%, now I'm being stress tested to 8/10% - and not meeting the affordability for the mortgage I have had for 4 years! Also I can't remortgage to avoid higher rates because I can't meet the affordability... Which means more chance of paying the predicted 8%!!

"as renters basically pay their landlord's mortgage in many cases."

Well that was the business model that some landlords had, but unfortunately rents are actually set by economic conditions, if we head into a recession there will be plenty of competitively priced rental about as people try to make ends meet and younger tenants go home to parents. You can walk away from a rental but you can`t walk away from a large mortgage deb, it follows you until you pay it off.

A ten year fix at 2% would have been a dream solution.

Same here.

Not sure why people who have been patient for a long time to wait for falling prices should be penalised for this.

People who want to borrow lots of money have benefited for 10 years from low rates. People who don't want to do that and saved have been penalised during that time.

Now the situation is reversed back to what it was before 2008, it is about time for savers to have their day in the sun.

I don't know a single person who has saved more than the rise in house prices though.

Might be a stupid question but what happens when you remortgage if they decide you can’t ‘afford it’ what happens then?

You don’t technically have to remortgage. When your current fix comes to an end, you will automatically go on SVR (which is historically more expensive than the fixed rate).

I do !

House prices haven't risen by stupid amounts everywhere. I bought a place in 2018 for about 5% more than it was originally built for in 2005.

They'll discuss moving to interest only or extending the term in order to make repayments more manageable l suspect.