is this a good idea to put an end to immense financial stress?

[monsh]

I have a nice sized four bed house in a nice area. Purchased for around 480k a couple of years ago but only have 250k equity. I’ve found things a struggle. The mortgage is 900 and I’m living her alone now after my relationship ended. So I have no help with bills etc. My take home pay is around 3k. I used to save around 700 a month but I am struggling to even save 100 at the moment. I’ve tried all sorts like cutting back the sort of food I would normally get or not eating out, no cinema etc. I don’t do much anymore and finding it really miserable. DD is only small so she won’t remember this house. Would it be a bad idea to try and find someone cheap that I could buy mortgage free? I’d have to leave this area probably and it makes me feel guilty as I know it’s a nice home for a child. Our lives are so miserable without any spare money though. My wider family are all mortgage free (in large homes) and I just don’t know how else to move past this stress. Last year we spent so much on heating the house and I am dreading it again this year.

*try and find SOMEWHERE cheap, not someone! Had enough experience of cheap men sadly!!

Good idea. Knowing the roof over your head is yours and no-one can take it away is a massive relief.

Get some foreign language students in to help.
My take home is the same as yours but my mortgage slightly higher.
however, if you can buy a house that you like for the equity you have to then do it

If it is just you and one DC then I think that makes total sense. No point spending more than you can afford on a big house you don't need. Can you not find something smaller in the same area? For me, I'd rather be worry free re finances and have money to do things rather than have a bigger house I don't need.

I would, or somewhere with a smaller mortgage.

Check how much ERC you would have to pay though, it can be thousands!

I wouldnt want to live in a not nice area if I had a choice, but I would happily live in a nice two bed terrace or flat over a 4 bed house I was stressed about heating and paying the mortgage on.

Is there a compromise where you downsize to something smaller but keep a smaller, more manageable mortgage?

Ive seen some places around 240k. We’d been in a two bed, probably terrace, less nice area etc. Wouldn’t be able to move too far as I don’t want DD miles from her family. The areas are just not so nice and I don’t know if I’m just giving up? Things aren’t going to get better though are they. If anything it could be worse when this fixed rate ends in 2026.

@electriclight we are on 2.5% so if we switched now then any saving would be wiped out by the increase in rates.

Are you talking about equity release? I think Op is just saying she'll sell her house and use the money left over (equity) to buy a smaller property outright.

Is there a point between no mortgage at all and half or quater the current mortgage where you can stay in the nice area?

Either find something smaller / cheaper (not necessarily mortgage free) or rent out a room?

It’s depends a bit on a few factors. You dont say how old you are and if moving would mean losing contact with family or friends who are supporting you as a parent right now. If you can get smaller accommodation in the same location for less it does make sense as not only will you reduce your monthly utility costs but a property always requires a bit of upkeep so the bigger the house the more the maintenance is going to cost you. Does your child attend a local school and would a move require you to make a change?
if you wanted to try and hang on where you are a lodger might suit but it’s not an arrangement that works for everyone.

Sounds like it's just you and 1 DC, in your position I would absolutely downsize. With the equity you have, you would probably be able to afford a 2 bed house in the same area. Your mortgage would be so much more manageable. Also don't discount a garden flat though a leasehold property isn't for everyone I know.

I'd downsize. I wouldn't carry on living unhappily just for the nice big house.

Could you compromise and buy a house in a better area but have a small mortgage? Otherwise I’d say you’d be smart to sell up and fund a home you can enjoy with the equity. You’ll never had to worry about the roof over your head again and as you say in 2026 when the rates change for you you could be even more worse off again. Sell up and find somewhere you can comfortably manage and enjoy your life. DD I’m sure would rather be in a 2/3 bed home in a slightly worse area but get to enjoy nice activities and a stress free mum

Have you had your house valued recently? It may be worth more than you think, giving you more chance to purchase in a nicer area, hopefully!
I would definitely rather a smaller, cosy home with no stress.

You could either move somewhere smaller, or use the extra space for more income, so lodgers, students or air B&B. The second option would benefit you more in the longer term, as you would eventually be mortgage free on a larger property, but you might decide it’s more trouble than it’s worth.

'Check how much ERC you would have to pay though, it can be thousands!'

"Are you talking about equity release? I think Op is just saying she'll sell her house and use the money left over (equity) to buy a smaller property outright."

It's an Early Repayment Charge for the mortgage

No, an ERC (early repayment charge) is due when your mortgage is repaid. It’s calculated by the bank based on how many years fixed rate are left and how much loan is outstanding.

My mortgage is currently approx £165k with 4 years left on the fixed rate, the ERC is about £7k.

Be carful sometimes short term pain is better in long run.. If its a nice house in a good area.

On balance I d say no. The cost of moving will likely outweigh savings.

Firstly do you get universal credit?
Can you extend your mortgage

Also financially things will get easier as your DD gets older and maybe use the money you'd down on stamp duty/solicitors fees on your bills? Will this tide you through the expensive years?

The likelihood is that once you size down, sizing up will be more difficult, and costly.

I think downsizing is a great idea. The house is big for just the two of you. But priorities for me would be:

1. area with decent schools with wrap around card and feasible daily journeys
2. safe area for a growing child
3. near to family.

If fixed til 2026 and you can manage then is there a compromise between "mortgage free 2 bed in a not nice area" and "mortgaged to the hilt in a 4 bed nice area"?

Small mortgage on a 2/3 bed in a nice area?

Could you get somewhere a bit nicer and still have a small mortgage? So look around the 300k mark?