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.

If you can buy a 2 bedroom terraced house mortgage free you will be giving your DC security. With mortgage interest rates so high you will have a much bigger disposable income so you and DC can enjoy the life you have. No point in just existing when you could be enjoying life and affording a nice holiday every year. You can afford to make the 2 bed terraced house lovely inside. You'll save so much interest and you will feel so much stress removed once you are mortgage free. I finally repaid my mortgage in June and still can't believe the relief I feel. I saw mortgage rates had risen again and then thought oh it won't affect me anymore.

See if your mortgage is portable and then consider moving to a smaller house in a nice area with a lower mortgage.

You need to consider schools including secondaries.

The fact all your family don’t have mortgages is not the norm and £250k equity on a house worth £500k is a lot.

Do you get child maintenance?

I would never take in lodgers with such small children in the house. Sorry and I know that the majority of people are ok but because of a past job I just would not take the risk. Sometimes you can know too much.

Downsize and never ever compare yourself to others as there lies misery. Really do look at the area though and maybe have s small mortgage. Look at crime reports wherever you consider buying.

You have a 4 bed home in a nice area which is quite generous for 2, so yes you could by a cheaper home. Owning a home outright would be considered a luxury for most.
I think in your situation I would be looking at moving to a less expensive area but I'd keep my options open. I'd look at several different areas and just go with the one that was the best 'bargin'. I wouldn't necessarily need to be mortgage free so if you saw somewhere cheaper in an area you really liked I'd go for that even if it was more expensive than another option. Put your home on the market and test the waters. Research schools and facilities in areas you're considering. Don't tell the world but be prepared for friends and relatives to ask lots of Qs when they find out and expect you to have a plan. A move will cost so get it right.

I must admit I'd be tempted to stay put. You are managing to save £100 a month, so things aren't that bad.

You would waste a lot of money by moving and it would be a shame to move into a smaller place in a less nice area unless you had no other option.

Personally, I'd take in one or two lodgers and use their rent to overpay my mortgage until I felt more financially secure.

Can you port your mortgage so at least some would still be on the lower rate?

I'd take in some female lodgers - language students or women who work away from home during the week but go home at weekends.

My parents took in language students - usually French - when we were young. It made French GCSE and A level so easy as I grew up hearing them chatting away.

Friend took in lodger. Gave them the enquire room as she could rent it out for more money.

Hi OP,
I think you are very wise to tackle this now before your fixed rate ends and the shit really hits the fan.

I think some people replying are underestimating the scale of the problem. You already feel like you are not able to take part in normal little treats like cinema or a meal out and lack the ability to deal with a washing machine breaking or a car repair without using savings.

£230000 at 2.5% over 30 years is £909 a month - I think that is broadly reflective of your mortgage.

By 2026 if your mortgage amount owing is down to 220k
£220000 at 6% over 27 years is £1,373 - so almost an extra £500 a month - with no guarantee it won't be higher than this.

I also think the suggestion your current house will hold it's value well is naive. House price falls are predicted. I've never heard so many people in real life voice out loud that they are glad they didn't upside as they wouldn't have been able to manage, read so many stories in the news about people who can't afford their mortgages, or seen so many threads on mumsnet about people needing to downsize.

There are many people in small houses that can't manage too but they will cling on for dear life as their alternative is an overpriced and insecure rental property - if they can get a property at all.

OP - downsize in a heartbeat. Be mortgage free or very low mortgage. If you and your child lived in a comfortable two bed now with comfortable finances you would never in a million years be looking to move to a four bed detached which stretched your finances. The absolute last reason you should be staying is because of what houses other people live in or what other people think. How much thought will those other people give to you when you are running up debt and ccan't afford to send your child on the school residential? It is you and you alone responsible for your child's quality of life and they will never grieve not having grown up in a 4 bed detached. They may grieve however a stressed/depressed mum, and being excluded from an ordinary quality of life and activities.

You know what you need to do.

I was in a similar situation and I decided to downsize the mortgage. I went from a massive 4 bed detached to much smaller 4 bed detached and the difference it made was huge.

I figured I could stay in the massive house for another 8 years until my DC where 18 but I wanted a house that my kids would have memories in before they flew the nest. So I moved to the smaller, much more manageable house, one I could afford to heat.

It’s a great house, lovely sun trap and thank god I did because I could not have kept the big one covid and certainly not during cost of living.

Ask if you can port your mortgage.

One other thing I would look at is the catchment area for the good secondary school in your area. It may seem a long way off now but it’s really important. If you’re out of the catchment you won’t get in if it’s oversubscribed.

Can you take in a lodger
sounds like you have the room and space

so many people are looking for a room you would have your pick

is there nothing 2 bed in your area?

I should say I think the deciding factor for me was that I realised that I could afford to keep the big house as it was but I could not afford to replace things. So if the boiler went, or the roof needed doing I’d be stuffed.

If it helps my criteria for the new house was:

1. Safety. Being a lone parent I did not want to be on a road/path. My house is in a corner.
2. That my DC could walk to secondary school ok. This was pre covid and they had to do that as I was commuting to work.
3. On a bus route. This was because I’m epileptic but also thinking of DC when they were older.
4. Got the sun in the back garden on an evening.

We did this - sold up and wiped out mortgage and practice debts in order that my OH could be relieved of the stress of F/T work which was making him ill. WE had 3 children and it caused a great deal of upheaval, but was absolutely the right thing to do.

TBH, if I were you I would look for keeping an affordable amount of mortgage in order to stay in a nice area but in a smaller property. As your DD gets older being in a better area will become more important.

In your position, I would downsize but not to a bad area. I'd rather take a small mortgage and live in a nice area than be mortgage-free in a bad area. If you have £250,000 equity, what would adding on a £50k mortgage or something allow you to look at area wise? You can always pay it off more aggressively when your circumstances allow.

For example, a £50k mortgage over 25 years is £343 a month at current rates of 6.1%ish. A huge difference from what you are currently paying and frees up money in your budget. You can then overpay it or save what you can to pay it off sooner than that 25 years but with the flexibility to pause for expensive periods of your life.

I think it makes sense to downsize as you'll probably save money on council tax and utilities too. If you want to be in a nicer area you could look at getting a small mortgage and increasing your budget to £300k. You're still going to be better off each month.

How much is a 2 bed in your area

Why do you have to move into a smaller place AND into a not so nice area?

Stay in the area but downsize the house and the mortgage.

TBH I think you would be completely mad to stay in a much bigger house than you need and be so financially impacted by it.

Having money for nice food, days out and cinema trips etc will enhance your DDs life so much more than two spare bedrooms.

What would selling the house and keeping a small mortgage get you. You don't want to live in a bad area. That wouldn't be any good at all.

@monsh honestly I would look to down size to a 3 bed not a 2 bed , ideally in the same area or a nice area nearby. A 3 bed will give you more room, particularly in the teenage years.

Part of this is accepting what you were saving each month has reduced. However, your mortgage is an investment I.e. each payment buys a few more bricks of your home.

If you have been saving £700 so you must have a reasonable cushion. Is it maximising interest? Is it big enough to use some to pay off a chunk of mortgage in 2026? This could reduce payments going forward.

There is this myth that everyone has loads of disposable income, they don’t. It is a struggle for most people, particularly single/lone parents, with a large mortgage during your 30, 40s. By your 50s there should be a light at the end of the tunnel - mortgage paid/nearly paid, children finishing uni and starting to earn etc. releasing more money for savings etc.

You might save a lot extending the term, I'd review options with your mortgage lender first before taking decisions. It would be the lowest hassle and would preserve the investment you already made instead of paying more for stamp duty, solicitors, moving fees etc.

Sorry I know lots have said this but it's not an either/or - you can stay in the nice area AND downsize, leaving you with a very manageable mortgage, a good quality of life, your support network, and DD not having to change schools.

Don't feel under pressure to be on the same footing as your family - you've got to do what is right for your circumstances and unless they are all single parents there's no comparison. You've done brilliantly getting on the property ladder at all and your daughter will benefit from that in terms of security and not having to move unless you want to. Really well done.