To think my daughter is taking a crazy financial risk?

[daufhtercrusus]

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.

@Grrrrdarling

Say what now?

This 'poor woman' was able to get the mortgage on her own and clearly has a good job. She doesn't need to rely on benefits and nobody can make her sell, what a ridiculous comment.

Without housing element the basic UC your daughter can claim will be about £638 a month & as she won’t be able to claim the housing element, it doesn’t cover mortgage payments, she can earn £631 a month before anything so taken off her UC. She can also claim for Childcare but that claim depends on what childcare she needs & she will have to cover those costs upfront each month as childcare element is paid in arrears.
She can apply for what is called SMI (Support for mortgage interest) but that is a loan from the DWP, interest is changed on it, & although it doesn’t have to be paid back immediately it will have to be paid back if the house is sold or passed to anyone else.
For UC it seems as though the house will jut be counted as capital though so having her own home will not be taken into account when calculating assets; which is good news. I always thought assets were all counted so learnt something new myself although I’ll never own my own home so it is irrelevant information for me.
What your daughter needs to do is make sure she can cover all her necessities & work out if keeping a 4 bed house with just 2 of them in it is worth it right now.
Hard to let go especially as it is her home BUT it is just bricks & mortar.
Be there for her, as much as you can, & hope everything works out for her ❤
Info can be found here…https://www.citizensadvice.org.uk/benefits/universal-credit/on-universal-credit/check-how-much-universal-credit-youll-get/

Why are you infantilizing her?
She saved to get the mortgage, she is obviously aware of the cost of bills etc.

To go back to your thread title.

AIBU To think my daughter is taking a crazy financial risk?

It's not like she's trying to take on the mortgage now, she already has it.

Around here £1000 a month would probably rent you a one bed flat. She is probably far better off in her house and can rent out rooms. It sounds like she has a decent enough wage to pay a mortgage and support a house anyway.

Just found information to the contrary of what I though benefits counted as assets when doing calculations for UC but sadly you can’t edit comments on here.

OP’s D may need to rely on benefits but it is upto OP’s D if she applies. She would be mad not to though because at the end of the day she, like the majority of us, pays into a system that should be available to us all when we need it.
Very few claiming benefits are doing so without contributing to that pot before they need to claim from it.

OP’s daughter’s home will NOT be counted as an asset when calculating her UC claim BUT she won’t be able to claim the housing element of UC to cover the mortgage. She will however be able to apply for an SMI loan (support for mortgage interest) from the DWP but interest is charged on that & it has to be paid back when the house is sold or passed to someone else.
As she can’t claim the housing element she will also be able to earn more each month, £631, before UC take 55p out of each £1 she earns over that amount.

FYI I actually have a friend who was forced to sell her home by UC before she could claim!
The house was her retirement pot as she planned to sell it once she retired & live off the profits.
I now know this was false information but she sold her house 2yrs ago now so I don’t know what comeback she could bring to the DWP’s doorstep for their forcing her to sell when her house wasn’t even countable towards her assets for the purpose of calculating her UC entitlement.
She used the profit from her home sale to buy a small 1bed flat, that will do her into & out of old age, so she now has no mortgage BUT she has had to live off the leftover cash from sale of her old house before she could claim UC.
She had to leave work due to ill health & despite trying to find work nothing is suitable with her illness & galloping old age is taking it’s toll.

I’ve passed link & info to OP in another comment so hopefully she can put her mind to rest & trust her DD knows what she is doing.
I am assuming her daughter has done her maths & knows she can keep the house because it would be madness to try & hold onto it if she couldn’t afford it long term.
Hard to let go of something if you really love it but it is just bricks & mortar. As long as OP’s DD & her child are happy, healthy & managing financially that is what matters.

@Grrrrdarling

She already got the mortgage on her own and has been managing to pay it up to now. She clearly has a decent job.

Her repayments are affordable (or else the bank wouldn't have given her approval) and she's got a fixed rate until 2027.

How do you think giving up this house is going to save her money? Do you think solicitors, estate agents, movers, etc, come cheap?

None of it is cheap & no it wouldn’t but having a smaller mortgage could be more affordable in the long run.
If I could edit my original comment I would but I can’t.
Basically OP’s D’s home will not be counted as an asset when they calculate her UC claim, if she needs to make one. I was lead to believe otherwise from previous enquiries, before UC became a thing & from a friends experience of having to sell her property before she could claim UC!
I believe she can still claim the childcare element of UC without anything else, if her wage is over the threshold for basic support, but childcare isn’t something I have needed to claim so I only know it is paid in arrears & you have to cover the payment upfront each month yourself from friends who qualify for that help.

It's not easy to get a smaller mortgage in the current climate. She would likely end up paying a similar amount for a smaller property.

On 40000 a year as a single working mom with a mortgage you do not get benefits. You get child benefit of 96 every 4 weeks and any support from the father on top. Universal credit do not top up if you are on a good wage.

Working single parent here on a take home salary of 2k per month and I'm not eligible for any benefits (other than child benefit).

It's a popular misconception that single parents receive generous benefits

OP the problem you’re facing on here is that you have given ZERO indication of where in the country you are and average house prices.

A 4 bed in EAST EAST EAST London (basically essex) would cost you between £450K to £600K (Yes, in essex), whereas the same 4 bed in Sunderland will probably be around £120K to £160K.

The only thing that would make sense here is that you’re in the mid-north and avg property prices are very low needing only a £100K or so mortgage.
Anything else and you’re stuck in the past.

We have a whole generation right now that think that 0.5% Band of England base rates and therefore 1.5% interest rates on mortgages are normal and the norm (anyone 30ish or below really right now), please note those were artificially engineered by the Bank of England.
That’s not normal.

So payments of £500 a month are ridiculous for the majority of people taking out a mortgage on year 1-3 on a standard 30yr mortgage (yes, also most people take out 30-35yr mortgage as the norm as the only way to make repayments work out).

Lastly, your daughter is an adult and she can make her own decisions and personally I don’t really think you should be interfering much about this given that you don’t even know what her salary actually is?

You also don’t know for certain whether her ex was even contributing to the mortgage payments. I assume he was contributing to other costs, but still a relatively large unknown.

If you really want to “interfere” then you can simply tell her that you’re concerned for her as you don’t think that you and dad could help her IF hard times were to come by.
You then leave it at that. Don’t mention it again.

I also personally think that possibly she is taking a bit of time to process the breakup and re-learn life differently.
House moves are… a LOT. They also cost, a lot.

She also had this house BEFORE him, so why shouldn’t she continue to enjoy it?
I find this rather bizarre.

sounds reasonable, we pay almost 3k for a 4 bed, if she can afford it she is fine.

A single working mother paying childcare costs, if she doesn't have any significant savings, is likely to be eligible for some UC even on the wage the OP thinks her daughter is on.

@daufhtercrusus So where will your dd live on less than 1100 a month? In a (probably) nice home?

You're either making this pile of shit up, or your views are so out of date Bobby Ewing hasn't got out of the shower yet

i think that’s a normal amount for a mortgage tbh. She can downsize but moving house costs . Stamp duty, solicitors etc

she can always get a lodger!

sounds like she’s old enough to make her own mistakes/decisions

But if you’ve taken out a mortgage fixed to 2027, you can’t just decide to downsize and pay a chunk of your mortgage off before 2027. This is because from the bank’s perspective, they are expecting to receive interest (ie revenue for them) until 2027. If you must sell up and re-pay your mortgage early, you’re often charged about 10% of the outstanding loan.

Add £20k or so of moving costs on top and it may very well mean it’s not worth it. The new mortgage would have to be hugely less.

We don’t know the OP D’s situation so shouldn’t be advising that downsizing is going to be best in the long run when it may well not be.

One suggestion the OP could make to her D is to have a chat with an independent financial advisor (which she may have done already).

£1100 is definitely not a large mortgage for a 4 bed house...I don't think you'd be paying much less for a smaller one either. Pretty reasonable mortgage

The last time I had a mortgage under a grand, it was on a little two-bed in the 90s! According to Zoopla, it would now rent out at 800ish/month so still well over your 500/month ceiling.

OP, the bank assessed her as being able to pay - and they don't muck about, they take everything into account. She seems to think she can pay, and she clearly doesn't muck about.

With the best will in the world, just support her through the breakup, don't try and force yet more change and stress on her with the idea of a move.

Your daughter is an adult, let her make her own decisions

OP I think you need to swiftly disabuse yourself of the notion you can get anywhere to live for £500 per month or less these days. £1100 per month for a 4 bed doesn't sound too bad to me. If she got the mortgage on her own then the bank will have checked affordability for her alone, they ask ALOT of questions. That said she will have high childcare costs if she is paying for a nursery or childminder 4 days a week. I don't really know much about benefits for single parents but I think other than suggesting she checks all her entitlement to any benefits or support with childcare costs you stay out of it. She does have the option of getting lodgers if money gets tight. Moving house last year cost us about £16k and the market is not great, all moving may get her is a couple of hundred less on her mortgage , if that, and significantly reduce her savings. Can she port her mortgage for no extra charge, what if she ends up on a higher fixed rate? And then there's the stress of moving with a small child. I don't think you are financially savvy enough to advise her to be honest so I would stay out of it.
Her ex wants nothing to do with his daughter, that is the more pressing problem.

I haven't been eligible for childcare costs. I get tax free childcare but that's minimal and I'm in a very similar situation, minus any contribution from the dad

Absolutely 100% tell the company.

Your daughter sounds like an adult; having children, owning a home, being married.

You are welcome to have your concerns, but you’re at risk of hurting your relationship if you share them.

4 days a week isn’t part time and many employers will let you do work different hours to make up for that loss of a day.

I think you should keep your thoughts and opinions to yourself on this on and let your daughter figure her own life out.

Tell what company, what?
That a grown adult who was assessed as being able to afford a mortgage is going to be paying her mortgage?!

There are no certainties about UC, but also none of us know the Ops DDs details so we can't give any help other than to point out that the OP is completely out of date with anything financial. I just hope the OP isn't responsible for anything in her home or advising anyone.

I'm sure the DD is more money savvy than the op realises and that's what the OP doesn't understand.

Why does she need a four bed house even before splitting from her partner? Seems too big a house to me.