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.

You do not have someone there to help you with your child, so I would definitely go for downsizing and working part time at this stage. Tat leaves some slack in the system, lower child care costs, availability for school pick-ups when the time comes etc. Bringing up a child on your own is challenging, and the more slack you can create for yourself the better - it will help keep you sane and happy, and sane happy mothers are what a child needs more than an anything else.

It is tempting to regard one's life as a financial game - concentrating on how to make the most money and allowing that to rule decisions. But perhaps it is better to start with what the needs of you both are, and make the financial decisions fit that - it might mean a bit of financial loss in the long run but you only get one crack at making a happy childhood for your child and that needs to come first.

Of course you feel overwhelmed. All of a sudden you are on your own doing everything. Time to batten down the hatches , focus on yours and baby's immediate daily needs and just live. Enjoy the time with your tiny child. It's a special time.

Put aside thoughts of equity and all that unpredictability and things you can't control. Get a grip on what you can control. That's your home environment, your friendships, your family. Double down on that.

There is plenty of time to make bigger decisions later on once you've got over the shock of being single.

You have enough to get by, so get by. Gain your confidence. Have some fun. Surround yourself with lovely people who care about you.

One day at a time. Focus on the love and security you can give yourself and the baby. Be kind to yourself and just live. The big stuff can wait.

Many people could only dream of £1k per month spare after bills, so I’m not sure why you are panicking? Yes it might be worth downsizing but there doesn’t seem to be an urgent need to move just yet. Maybe keep an eye on rightmove in case the right place comes up and try and remedy your anxiety.

In your position I'd let a room or two and see how it goes. You can specify if you want female only lodgers and vet carefully and agree house rules (just think through what you want and be clear about the at the letting stage). I know quite a few single mums who have lodgers and was a lodger to a single mum back in my youth. Its a pretty common option around here.

Stay put: Right now you have earning power and only one child to look after. Provided you have decent childcare, a short commute and work <40 hours per week, this is easily doable for an efficient and determined woman.

When you are old, you will not have any more earning power. That's the time to downsize and take the equity as part of your pension.

You're in a very good position financially, so I'd also stay unmarried if I were you. This way your money stays with you and your child.

I think that the lodger idea is a great one. Many women find themselves in a position looking for affordable accommodation - that can be young people or older folk too. It is a good short term bridge. Agree with not making rash options, a bigger house gives you opportunities.

One other thought... you mentioned moving back into the house you own. How long have you owned it, and how long were you living elsewhere? Did you let it out while living with your partner? I think you'd have to pay Capital Gains Tax if you sold it now which would add to your selling and moving costs. I could be wrong but it's definitely something you'd need to look into.

I've been in the same position in the past. Remember when the interest rates went up to 15% in the 80's. I was a single mum.
I hung it out for the long haul. Now I'm near retirement I'm glad of the fact because now I have finally downsized and given my DS enough money to buy his own home.

Now is not a good time to move IMHO. Your ex is contributing quite a reasonable amount going off from what I've read on here. You have £1k a month spare. What exactly needs to be paid from that. I dont see what your financial problem is.

If the move back to your own house was only a few weeks or couple of months then I would do nothing for at least 6 months or a year.

Just allow yourself that time to settle back into your life. Panic makes us rush into things.

You are safe, live near family and your income is ok for now.
Selling and buying houses is really really stressful. You are putting yourself under fierce pressure.
That house might be very handy in the future.

OP, I’m wondering about how you’d feel about sharing your home? It would be a wiser decision in the long term to stay put (moving is always costly, stamp duty etc. and if you’ve only been there a short while you may have mortgage penalties for leaving/porting early). Your 11 month old is too young for an Au-pair, but perhaps you could offer another parent/person a room, in exchange for reduced rent and help with childcare?

Just want to encourage you not to panic OP. You're in a good position on paper; my impression is that your shock/upset at suddenly needing to single-handedly parent your baby is getting transferred a bit onto the finance worries?

I agree with the general advice to hunker down for now, get some therapy if you need to, lean on your family for support. Take some time to breathe and process what's happened. Don't rush into anything.

Then make a decision about the house when things are calmer. Maybe there's a friend who would want to move in to one of your spare rooms? Get some rental income without it being a stranger? It could be worth putting gentle feelers out.

Wish you all the best, it honestly sounds like you and your baby will have a better life than if you'd stayed with your ex. So it's all moving in the right direction, even if that feels counter-intuitive right now.

Go and look at the £275k house. If you like it Offer £210 because thats all you've got. See what they say. How much did the current owners pay for it and when? As long as they don't make an actual loss they might be amenable. Don't ask don't get.

I felt similar when my husband left me with 2 DC. If you have £1k left after mortgage and bills then I’d stay put. Save £500 a month to put aside for emergencies and that still leaves more disposable income than lots of people have (including me). Also if you’ve not included CMS in that amount you could save that each month too. I’d say there is no need to panic - I can appreciate how scared you feel now but that will ease. I have a credit card with a big limit that I don’t use but it’s there in case of emergencies which helps me feel more secure. Moving will costs £1000’s in fees. Give yourself 6 months and maybe re-assess then.

Not necessarily if it uses disposable income you don’t have or takes a chunk out of that equity. With fees, mortgage rates a lot worse, moving costs, estate agents fees and tarting the place up to sell £25k just disappeared. Like other posters have said, you can manage for 6 months. See how things are, save a bit if you can (if maintenance is spotty, can you live off your income, and put any maintenance you do get into savings pot?) reassess. Mortgage rates may stabilise a bit. Plus I know I would be incredibly frustrated to be living in a much smaller place (probably with no garden) but paying similar in mortgage payments.

If things are tough the suggestion of renting a couple of rooms to a mum with a similar age child is a really, really good one. You might actually make a friend out of it who’s been through similar and can support each other when times are tough. I would defo explore this in your situation.

Have you considered getting a lodger? Perhaps another single mother with 1 child who could rent 2 of your rooms and share bills? A lot of lodging income is tax free up to a large point as well.

Lodgers are great ideas but not suitable in a house with children.

It’s very early days at the moment, you don’t want to regret the decision you make in a rush so I’d get used to your new situation for a few months, see how things pan out and don’t make a decision until the Spring.

Agree very much with this.

I’d definitely look at having a lodger OP. When I was broke I let out a room to a nurse for a few months. I hardly saw her as she was always working, sleeping or out.

take a deep breath and don’t make any rash decisions now.

there are lots of costs with selling and buying somewhere else. So likely to eat up profit or savings.

also if you are on a low mortgage rate that is worth more in a larger property.

also even though you are not thinking about it at all now - your family may expand and the house you are in sounds suitable longer term.

so I would stay put.

your childcare costs will reduce when you get the funded hours.

I would sell now, that equity you have isn't going to grow its going to shrink over the next couple of years. If you are able to get yourself in to a mortgage free property life will be much more relaxing and you won't care so much that property prices are falling.
We have been mortgage free for a good number of years and I can't tell you how much it frees up your mind. Ploding on with a big mortgage whilst prices fall is a depressing situation to endure - especially if you had the option to be debt free and didn't take it.

I wouldn’t be keen on having a lodger with their own child, much too intrusive.

Stay where you are for a bit. You should not make any quick decisions. Take in a female lodger if you need to earn extra.
You will possibly never have the opportunity to have as big a house again. In five years you will be glad of staying if you can manage it.

They key time to move is when you have to start thinking about schools, I would settle down where you are for a year. You never know what the future holds, you may meet someone else and need a four bed house, prices might go up (or down). Just stay put, in three years time your 11 month old will have bikes, scooters, Wendy houses, climbing frames - whilst extra money will help, in my experience, so does space. I wouldn’t be in a rush to leave a bigger house, if financially you don’t have to. I would rather tighten my belt and have the space.