In a financial panic, which idea is best please?

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I am no longer with my partner. We have an 11 month old. Luckily I had my own home I could move back into which I did last weekend. However, last week I have been taking stock of the situation and I am hugely panicking. Basically I don’t know whether to downside to mortgage free and save money from there, or keep plodding on in the hope the house goes up or retains value and then reconsider whether to sell in a year, two years or three years etc, with hopefully more equity. My family are of the opinion that I should stay put and hold on a bit… for context the house is valued at 490, and in the last year has only gone up by 8k, in contrast to the year before where it went up 17k. I know these are valuations and doesn’t mean anything unless someone pays that for it but it’s all I have to give a general idea of where I am potentially at. There’s only 210k equity so family are saying if I hold on a bit longer then I might get that up to 250k down the line and that would make life easier when I move. I’ve sort of accepted I will have to move at some point.

I have around 1k spare a month after expenses but the mortgage is 1,100 and I do feel if I got rid of that then I would be able to relax a bit and maybe even go part time. I can’t do that now. Ex will pay only 420 in maintenance so it’s not helping much.

Would you move into somewhere smaller now or wait it out? I haven’t even had such a stressful financial situation and I’m just so worried about the future.

If you plan to stay in the same area, if your property values do go up in the next few years, The new property you buy will also go up in value. So it would not make much of a difference.

The costa of moving are huge. The housing market is very strange at the moment.

£1k spare a month is a lot tbh. If you went to 4 days per week your take home pay wouldn't go down by 20% so that could still be an option. You could ask work to do a 6 months trial whilst you adjust to moving, the break up, become a single parent etc.

How long is left on your mortgage? Keep in mind if you move and pay off the mortgage there could be a hefty ERC.

Also stamp duty, solicitors costs etc add up!

@Reasontoreason is it not better to have paid off more on a higher value place though? Even if all prices rise the same I mean

I would downsize now. If prices rise you don't know that lower value ones won't rise comparatively more - imagine there will be more demand for them as people struggle more to afford property.

Will you have childcare costs? I would really struggle on £1k a month. I think downsize now, even if you lose a few grand in the long run it's peace of mind. Also a smaller place will be cheaper to heat and quicker to clean.

It does sound stressful, but it will pass!

I think the key issue here is whether ‘expenses’ include the mortgage. If you have £1000 left after paying the mortgage, I’d say stick it out, possibly with a lodger if you need more money.

If the £1000 is before you have to pay a mortgage of £1,100, I don’t think that is workable and you should look at downsizing.

Having said that, if you are on a fixed deal, paying off the mortgage by downsizing could cost thousands while you are in the fixed period so that’s something to bear in mind.

It is stressful, I was in a similar situation, toddler and a baby (so two sets of nursery fees) and a mortgage to pay on my own.

It's a couple of years of gritting your teeth and then as the free childcare hours kick in it gets easier. And I found toddlers don't really mind if you don't have any money. We just went on "adventures" to different parks or occasionally splashed out on a bus ride, and they didn't care that their clothes and toys were second hand.

Have you checked entitledto to make sure you if you will get help with childcare costs ?

Could you rent out your big house for a couple of years and rent a smaller place for you and your dc so you get a sense of how money works out on your own?
Then you will be In a better position to decide.

I would be very wary about downsizing now unless you absolutely have to. Downsizing in a falling market is not a good idea. You are very fortunate to be able to afford a 4 bedroom house on a single salary and if you downsize now then it may be very difficult or impossible to move back up the ladder. You don't need the space now, but things may change - you may meet someone new and have more children.

You're also looking at the mortgage just as an expense, but assuming you're on a repayment mortgage, you're also paying off the house. That money is essentially savings, just currently tied up in bricks. It's not wasted money. And if/when house prices rise again, a more expensive house is likely to accrue more value than a smaller one.

Plus, moving is very expensive - estate agents, solicitors, removals. Why create expenses if you don't have too?

But wouldn't most of your mortgage payment on your current property go towards interest? If you downsized now and were mortgage-free every month, you would have what you paid on your previous mortgage, which you could save.

I agree with the PPs who say wait and get used to your new situation, don’t rush into anything.

Remember that if property prices rise, they will all go up - the value of your house and the price of the alternative. Weigh the costs of moving - potential stamp duty, legal costs, survey etc - against the costs of staying put. It might be useful to work out how many months of your current mortgage would equal the costs of moving. maybe give yourself that amount if time to decide what to do next.

So I’d say don’t rush, a four bedroom house gives you more options to increase your income in the future - a lodger/Air bnb/work from home office/money making hobby/side hustle.

It depends on your interest rate and term. Our mortgage payments are currently about 1/3 interest and 2/3 capital repayment.

OP don't make hasty decisions. You can afford to sit on this for a couple of months.

Stay put till the New Year then take stock.

@BMW6 thanks. I feel so alone. It all feels too much.

Don't rush into anything. You've got loads of breathing space.

Consider all the alternatives. Chat to people who may have useful ideas. Are you at work? Will you go back? Have you factored in childcare?

If you have childcare costs and you haven't already run the figures through a universal credit calculator, do. You'll quite possibly get a chunk towards childcare bills which may make things much easier financially.

moving is expensive. you need stamp duty and moving costs.

consider your options.
can you take in a lodger?
split the house do you can rent a unit out? (mortgage, council tax implications building costs)

...and breathe... you don't need to do anything right now... move into your home and live in it for at least 12 months before you do anything. You CAN afford to stay where you are and I think it would be a huge mistake to move out of what sounds like a fabulous home.

If money gets tight you can get a lodger. Just get a single, professional woman and then you won't be worrying about having an extra person in your house.

This time next year things will look very different. Your family are right. Listen to them. Stay put and don't do anything rash right now.

I’d wait 6 months because it’s not good to make any rash decisions when things are so new. And then I’d probably look at downsizing. But you have 1k left after bills plus maintenance, you are not in financial trouble, so don’t panic. Also £420 a month maintenance for 1 child is a good amount, suggesting it’s no help is just daft.

I'd hold on and reevaluate the situation in 12 months. You're in a good financial position as you have £1000 spare each month. I wouldn't sell up, if it means an expensive 2 bed and new interest rate terms pushing the mortgage to similar to what you're already paying.

OP, so sorry you are in this position, not easy but the good thing is you have your darling baby, AND you have a great house with lots of equity.

Honestly. Right now, if you can get by each month, you need stability and security and to be near your family. Get a feel for life as a single parent and what your priorities are.

Does the £1k include your child benefit or do you have that in addition? What does the £1k have to cover? In months when your ex pays £400 can you put some aside for months when he earns less?

Your childcare bill will reduce at 1 and at 3.

How stable is your own job, and will you have opportunities for a pay rise / promotion over the next few years?

Selling and buying is in itself an expensive business: EA and solicitor fees to sell, solicitor, surveys, searches, stamp duty, removals to buy, and atm it can take months, waiting to get a buyer, waiting to get an offer accepted, waiting for your vendor to find somewhere to buy.

If you can manage for now, sit tight and see how you are doing in 6m or a year.

But just heat yours and baby’s bedroom and one downstairs room this winter!

The cost of moving alone (fees, stamp duty, removals, surveys) can be tens of thousands in itself. Wait awhile, do the figures, browse properties as it's unlikely you'll find the ideal place in a matter of weeks.

In your position OP I would sit back and relax a while in my large, affordable home with my spare £1000 a month. Sadly, I wasn’t in your position and had to choose buying nappies over food for myself!

Imagine thinking this is a financial panic... you're not broke.
Ffs these threads are dumb.

You don’t have to be broke to panic about finances and the future when you’ve just become a single mum. Comments like yours are dumb.