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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

To think my daughter is taking a crazy financial risk?

483 replies

daufhtercrusus · 14/07/2023 16:42

Unfortunately my daughter has separated from her partner with a 2 year old. She saved to buy the house they both lived in and both paid half the mortgage after they got together. He is not making any claim on the house as it was a short lived relationship which is fortunate in the circumstances. He has however said he wants not part in my granddaughter’s life which has left my daughter deciding to go part time to four days a week which will obviously reduce her income drastically. I know she will be able to claim maintenance but we don’t know what that looks like and I wouldn’t like her to rely on that. Me and DH both think she now needs to move to find somewhere with lesser mortgage payments, daughter is saying 1,100 for a four bed house is a good deal and it would be pointless moving now. She’s never told us her finances before but I am shocked she is now left paying this, surely this is far too much to pay especially as a single parent? Am I unreasonable to encourage her to downsize and get somewhere which much lesser payments? Her current rate is fixed until 2027 but it is portable. I am very worried for her.

OP posts:
headcheffer · 15/07/2023 20:22

Bloody hell if this was my daughter I'd be incredibly proud of her! A 4 bed house where she's the sole mortgage holder? A newly single mum who is determined to keep her home, and is going to give it a good try on her own? She rocks. Good for her. I'd keep your nose out of her finances OP and ask her how you can help support her during this time.

IpsyUpsyDaisyDoos · 15/07/2023 20:40

daufhtercrusus · 14/07/2023 17:03

@orangeleavesinautumn that is likely in London though which is to be expected. We are north of the midlands…!

In the Midlands that's really quite reasonable for a 4 bed in this climate. Moving with the market as it is won't make it cheaper for her. Times have changed since you and your 500pm

Gh12345 · 15/07/2023 20:42

OP I think I have to agree with you.

Sakura7 · 15/07/2023 20:46

My God you have your priorities all wrong OP.

Your DD is going through a major upheaval which I'm sure is quite traumatic for her, especially considering her charming ex wants nothing to do with their child.

You should be far more concerned with her emotional wellbeing than her finances, and you should be offering her support in that way.

Please do not even attempt to give her financial advice, you clearly don't have a clue what you're talking about and you're only going to upset her for no reason.

It is absolutely infuriating when older relatives impose their (completely unsolicited) advice, knowing absolutely nothing about the reality of housing costs in the current market.

Your DD is doing really well and she's absolutely right to hold onto her house. If she took your advice she'd end up in a far worse position financially.

Stop judging and have some faith in her.

Sakura7 · 15/07/2023 20:49

Gh12345 · 15/07/2023 20:42

OP I think I have to agree with you.

Well then you're as out of touch as OP is.

Kittychicken · 15/07/2023 20:51

daufhtercrusus · 14/07/2023 17:03

@orangeleavesinautumn that is likely in London though which is to be expected. We are north of the midlands…!

We’re looking at 4 bed houses in Wales and for most of them the mortgage is more than that! Times have changed, everything is expensive especially housing. We’re renting at the moment in the south west and it’s £1300 per month for a 2 bed!

Mumoftwosweetboys · 15/07/2023 20:58

CatStankShame · 14/07/2023 16:53

If we had known that was the repayment when she bought the house we would have told her that was too much but sadly we weren’t informed at the time

Why do you think you were entitled to know this, or could have say on whether she proceded?

Exactly! Also how does OP know that she can't afford it anyway? Maybe she earns well even on 4 days a week?

BottomFishBananas · 15/07/2023 21:01

It’s normal to be concerned for your daughter and granddaughter but all you can do at this stage is trust her. It would cost thousands to move house and to be honest her mortgage sounds fairly realistic in the current market - I was paying more to rent before I bought a house and my mortgage (in the midlands) is £1,200 per month.

Psychonabike · 15/07/2023 21:04

@daufhtercrusus

I get that you are concerned but you are at risk of giving your daughter some seriously terrible advice right now.

  1. Moving house is often unexpectedly expensive in itself so the majority of people would be better off making adjustments in their finances and mortgage type, unless there is going to be big change in monthly mortgage cost.
  2. You seem to be out of touch with the cost of housing as a proportion of income these days, comparing your past mortgage with her current figure.
  3. Her child is 2...childcare costs/changing working hours likely to be short-term. Perhaps she has a short term plan to get through this stage before increasing her hours again in a couple of years?
  4. Short term options include short mortgage holidays or going interest only for a while...both might be better in the long term than moving.
  5. You have no idea what she earns. You are guessing 40k but perhaps this guess is as out of touch as your idea of a typical mortgage?

I think if you stop giving alarmist, out of touch and non-fact based "advice" you might find that she is more willing to have a constructive conversation with you about how she actually plans to adjust to her new circumstances. But if you find that she's still evasive and unwilling to discuss detail it might not be that she is hiding a problem; it might be that you are so out of touch she has dismissed the value of engaging in discussion with you about it.

Rachpen · 15/07/2023 21:08

daufhtercrusus · 14/07/2023 17:01

I think we are just shocked at the repayments. DH and I would never have contemplated more than 500 a month so we were surprised to learn it was over a thousand.

Of course not, you were able to buy a house when the costs were lower and in any case your earnings and financial decision making is totally irrelevant. You admitted you don’t know what she earns and clearly the bank thought she could afford it otherwise they wouldn’t have granted the mortgage. Keep your nose out. She’s an adult. Frankly- I agree with her that it would be stupid to lose the asset and drop a load of cash on solicitors and taxes. I would welcome my mother asking if I was sure it was affordable but if she pryed into my finances I’d tell her it was private. You then have the opportunity to say you are concerned and you won’t be able to help if she needs it so she is aware of your position. In any case if you are correct and her salary is 40k she will take home around 2600 per month. 1100 doesn’t seem out of the question especially if her childcare free hours kick in and she gets maintenance. with the savings of £550 per month when he was contributing directly then maybe she’s built up a bit of contingency.

saraclara · 15/07/2023 21:11

Downsizing is rarely the answer that people think it is.

I've been looking at downsizing in order to help my kids with their own houses. But it was soon evident that unless I was going to down size majorly, at great cost to my qiuality of life, I wasn't going to free any significant amount at all.

I have a (not big) four bedroom (all doubles) house with two receptions, a reasonable sized kitchen and a down stairs cloakroom. Next door is a three bedroomed (one a bit of a box room) house, one lounge/diner, a much smaller kitchen and no downstairs toilet. Both houses detached and with the same sized gardens.

I worked out that after expenses, if I sold my house and bought next door, I would actually lose money, not gain it. I was astonished. There was far less differenc in our house values than I imagined.

Keeper11 · 15/07/2023 21:27

Your daughter has a fixed rate mortgage of £1100, until 2027.
if she was to downsize she would have to get another mortgage and now rates have escalated, it is quite likely her payments would not be much less for a much cheaper house.
in 2027 your granddaughter will be at school, so no childcare costs. I think your daughter is being very sensible, and I think you are offering poor advice.
You do not know the whole financial position, you do not mention any career progression plans she may have, you don’t really know how much she earns, or what other job related benefits she may have. You don’t know how much maintenance she may receive, or what state benefits she may be entitled to.
So coming from a standpoint of pretty much total ignorance of the situation, you are advising your daughter to sell her home!
YABU and I hope your daughter ignores your advice.

Dibblydoodahdah · 15/07/2023 21:41

So wish OP would come back on this thread and tell us (1) when she bought her house; (2) how much she paid for it; (3) how much her monthly mortgage payments were and (4) how much she earned.

I would like to get the full picture of the OP’s finances to understand why she thinks her daughter is taking crazy financial risks.

CrazyLadie · 15/07/2023 21:43

daufhtercrusus · 14/07/2023 16:51

I just hope she doesn’t turn to us to help meet the payments. She is saying that figure is reasonable nowadays for the size of the house etc and she wants to hold on to the asset… that’s all fine but at 1,100 a month it doesn’t strike me as realistic! If we had known that was the repayment when she bought the house we would have told her that was too much but sadly we weren’t informed at the time.

I'm a single parent and bought a house last year, it's approximately the same and your daughter got more house for her buck than I did. If she relapses she can't afford it long term she will make changes when required. She is a big girl and you have to leave her to live her life her way

mellicauli · 15/07/2023 21:44

If she ported the mortgage all the Terms & Conditions of the contract are moved with it. So she would be paying the same monthly amount until 2027 to live in a 2 bedroom flat rather than a 4 bedroom house. What's the point in that?

And she'd also have all the costs associated with moving to pay for too (average cost £12,000, so another full year's mortgage but paid up front rather in monthly installments).

Her best bet is to wait until her current deal is up in 2027 and then review if she wants to downsize then.

If she's struggling at any point she can:-

  1. go interest only for a bit
  2. get a lodger in
  3. extend the term of the mortgage
  4. go back up to 5 days a week
  5. sell the house at that point
  6. go for a promotion or get a new job that pays more money or start a side hustle
  7. she can rent out the house and rent somewhere cheaper

Lots of options.

Maybe if you can't help her financially as you'd like to, maybe you could help her with childcare?

CrazyLadie · 15/07/2023 21:46

daufhtercrusus · 14/07/2023 16:55

@NewmummyJ we are not sure, we think around 40,000.

No way she is only earning £40k per annum and gettinga mortgage with that kind of repayment, a mortgage lender would not approve that

jennyjones198080 · 15/07/2023 21:51

CrazyLadie · 15/07/2023 21:46

No way she is only earning £40k per annum and gettinga mortgage with that kind of repayment, a mortgage lender would not approve that

Show quote history

They would.

NeighbourhoodWatchPotholeDivision · 15/07/2023 21:55

Dibblydoodahdah · 15/07/2023 21:41

So wish OP would come back on this thread and tell us (1) when she bought her house; (2) how much she paid for it; (3) how much her monthly mortgage payments were and (4) how much she earned.

I would like to get the full picture of the OP’s finances to understand why she thinks her daughter is taking crazy financial risks.

There is no way OP is coming back. She's probably namechanged now!

Gettingfleeced · 15/07/2023 21:59

£1100/mo for 4 bedrooms is a great deal! She has options too for using the house as an another income stream, eg. Renting out a bedroom as an office space/beautician room/physiotherapy massage space etc. Or could take in lodgers, or rent out the garage/carpark space if she is near a town/train station or somewhere where parking options are limited.

I think she sounds quite savvy.

Maybe ask her what her plans are for the house and gently suggest some options for her to consider.

Devora13 · 15/07/2023 22:03

I wonder why you don't trust her to manage her finances? Does she have a record for getting into financial difficulty, or is she usually sensible with money?

ActDottie · 15/07/2023 22:32

Just let her get on with it and trust her. Tbh you seem pretty overbearing.

CelestiaNoctis · 15/07/2023 22:50

She'll get universal credit top ups as a single household? And go through CMS to get maintenence. And will get more free hours of childcare. And also she could take on a WFH job on the side. It could work out and I'd wait and see how it goes. Single mums are usually pretty epic and resilient.

RunBetter · 15/07/2023 23:01

mellicauli · 15/07/2023 21:44

If she ported the mortgage all the Terms & Conditions of the contract are moved with it. So she would be paying the same monthly amount until 2027 to live in a 2 bedroom flat rather than a 4 bedroom house. What's the point in that?

And she'd also have all the costs associated with moving to pay for too (average cost £12,000, so another full year's mortgage but paid up front rather in monthly installments).

Her best bet is to wait until her current deal is up in 2027 and then review if she wants to downsize then.

If she's struggling at any point she can:-

  1. go interest only for a bit
  2. get a lodger in
  3. extend the term of the mortgage
  4. go back up to 5 days a week
  5. sell the house at that point
  6. go for a promotion or get a new job that pays more money or start a side hustle
  7. she can rent out the house and rent somewhere cheaper

Lots of options.

Maybe if you can't help her financially as you'd like to, maybe you could help her with childcare?

I was going to make a similar point about porting your mortgage. My understanding of porting is you’re simply moving your current mortgage to a new property. You can’t reduce the size of the loan without being charged early repayment fees, which could be substantial (my outstanding mortgage is £400k, fixed to 2027, and the ERC is about £40k.)

I think the net result would be you’d free up some cash (the difference between the sale price of your current property and the cost of the new one), but this may well be offset by stamp duty, legal fees, estimate agent fees etc, and the actual monthly mortgage would remain at £1,100.

Aside from this - is it possible your daughter isn’t actually taking a pay but at all but has negotiated a compressed hours arrangement with her employer, whereby she works an extra couple of hours each evening when DD is asleep and can take every [Friday] off?

She might also have reason to believe things could improve soon, either a promotion might be on the horizon or the free childcare hours kicking in.

I agree with others here though - it’s not really anything to do with you unless she asks for advice. My parents have no idea what I earn or what my monthly mortgage is.

Inkyblue123 · 15/07/2023 23:05

As long as she’s not asking g you for money it’s not your business.

Grrrrdarling · 15/07/2023 23:22

Herewego81 · 14/07/2023 16:51

She will be getting a lot in benefits op

see for yourself on the benefit calculators

She won’t get a lot in benefits at all as she will get nothing towards the house due to it being her own!
To be honest they will probably make her sell the house because it is a financial asset meaning benefits see it as she has ‘money’ above the £6000 you can have in assets/savings, before benefits are effected.
Basic benefits with housing element amounts to not much over £1200 a month so in that situation she would literally have £100 to live on after paying the mortgage but she won’t get the housing element as she has a mortgage & housing element will not pay for a mortgage🙁
Back in the day you could have the interest on your mortgage, or some of it, covered by housing benefit so you didn’t lose your home but no more. Now you have to take out a loan from benefits for help with mortgage but that has to be somehow paid back 😬
Sad fact is this poor woman is going to have to either work more hours, which will also limit what benefit support she can receive, to cover mortgage & outgoings or downsize. Downsizing sooner rather than later will save her £££ in the long run.