In a financial panic, which idea is best please?

[ideasoutof]

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.

Please stop getting into a panic.

You have £1000 left after all your bills are paid plus over £400 extra in child support (far more than most get for one child). You are also sitting on a pot of cash of hundreds of thousands

Many families could only dream of this much disposable income left over. Try and get some perspective. I know it's scary as a single mum but financially at least you have no worries. Just sit tight.

How much would your house rent out for, more than the mortgage? How much less would renting a 2 bed be? Could you rent out the larger house for now, then rent something smaller for you and dc for a couple of years to give yourself some breathing room?

I’d stay for a year and then start to consider your options. You’ve just had a baby, gone through a break up, and moved house. Let the dust settle and then see how you feel. Don’t forget if you get a flat you’ll be paying about £100 a month service charge which you won’t be paying on your house - so there will still be costs. Look at your local environment- does it have good schools, good amenities, good travel links? If so, you’re not going to lose money on it. Do you plan on meeting someone new and/or having more children? If so, staying in the bigger house, although more expensive now, might work out cheaper in the long run by the time you’ve moved house twice. Give it a year, then decide.

Why express an opinion as a fact?

I would stay put and get a trusted lodger for a bit more security. If you are in a commuter town then you could look for someone Mon-Fri. £1k after expenses is a generous amount to live on for two people - assuming that’s after ALL expenses, e.g. food and fuel. Downsizing would relieve things a bit for you, but my goodness is selling a house stressful. You probably don’t need that upheaval right now. Good luck, OP.

In my area you could buy a two bed flat for 45,000 and a three bed house for 200,000 are you sure you need to stay exactly in the area your in?

You are getting some very good advice here, but also some clearly very bad advice.

Don't make any rash decisions. Selling your home will incur a lot of expenses and could result in a significant tax bill if it hasn't been your main residence. Give yourself at least six months to look at your options and make sure you receive informed financial advice.

Stay where you are. You have a great house, you won't ever need to move from, you're near family, and you can afford it.

Put the spare (lol!) £1000 a month into a savings account. If you get CM put that into savings too as a rainy day fund.

Your childcare costs will decrease over the next couple of years, and you'll have more spare cash.

Don't panic. You're in an amazingly good position.

I'm a lone parent OP have been for 14 years so I do really understand your concern. Shouldering all the responsibility is hard.

However, I'd say just settle down for a bit, there has been a lot going on for you and now is not the time for big decisions.

The great news is you are financially independent and have choices.

Don't do anything yet. Its not a good time of year to market a house anyway.
See how things are going and look at it again in Spring. In the meantime if you have £1000 a month spare, try to save some - if you have a savings account to carry you through an unexpected repair bill or your ex not paying CM for a couple of months you might feel more relaxed.
It must all feel overwhelming at the moment, moving would add another stress. Concentrate on taking care of yourself and making your house feel like home

Even if your current mortgage rate is portable, if you're within a fixed term you'd likely be paying an early redemption charge on any decrease in borrowing (e.g. if you're currently borrowing say 200k and would be dropping down to 50k, you'd probably have to pay an exit fee against the 150k drop). So factor that in to your potential moving costs if you downsize (which, as others have said, may rack up to quite a bit overall).

You do sound like you're in a panic. Give yourself time to work out your next steps.

It's not a great time to sell, to be honest, there's a winter lull, so I'd stay put until Feb, assess if you still need to move and if so getvon the market before Easter. Use the time between now and then to do the little jobs so you're house is in great saleable condition.

The hight interest rates are strangling selling prices and buyers are scarce. Apparently rates should drop in 24 so that will help your sale and also likely give you more options on what to buy.

I totally understand the need to downsize, as a 4 bed will cost more to run than a two or three bed.

Also check your current mortgage, is it fixed? If so there will be a redemption penalty if you pay it all or part off. Not telling you to scare you, but so you go in with eyes open.

Downsizing to make your mortgage more manageable sounds sensible to me. You'll be selling at a reduced price but as long as you're savvy, you can buy at a suppressed price, too, so huge benefits. Your £210k equity now could easily buy a bigger % of next property (because prices are suppressed) than £250k would achieve for you, in 2-3 yrs time.

I wouldn't.

As your kid grows you will want more space and a garden.

You'll be downsizing to them upsize again in a few years. Wasted money.

Plus all the associated fees with selling / buying.

Plus the stress of buying and selling is huge, even at the best of times, and you don't sound like you need that stress just now.

If you're struggling with the mortgage, ask if you can extend the term to bring monthly payments down.

You mention how the amount your property has recently gone up in value, but realistically obviously all properties will have increased in value. If in doubt best to wait it out.

Surely only someone absolutely desperate would want to spend working week nights in a house with someone else's screaming, teething baby and with the risk of being used as a captive babysitter?

I'm in the camp that says you've been through a number of traumatic changes in recent months, OP, and you need 6-12 months of stability (which it sounds as if you can easily afford) before making any more changes. Besides which, the housing market is currently pretty slow and flat. Settle into your house for the winter, settle into a routine as a single parent, put some money away each month for emergencies and then revisit this situation at Easter when things may look and feel very different. Good luck.

OP, you've just broken up with your partner and child father. Give yourself 3 months to breathe and see how you can manage, on the money you have. Reassess your situation in 3 months. You could sell and buy a smaller house even with a small mortgage it would be more manageable for you. I know your DD is only 11 months old now but quite soon she will be entitled to those government subsidized child care hours. Hang in there and don't be too hard on yourself.

OP I'm sorry you're in this position. It must be very stressful. Ignore the posters saying otherwise.

What does the £1000 need to cover? Is that the amount after all bills? Childcare? Food? Have you double checked whether you're entitled to any benefits/applied for single person council tax etc. Every little helps!

If you can afford to get by for now (without maintenance if he's not the most reliable), then I'd give it 6-12 months to let the dust and the housing market settle before making any major decisions. And don't get a lodger. I bet very few of the people suggesting that would actually do it thenselves with a young child in the house!

P.s. when I was 21 and had no experience with babies, I did become a lodger to a single mum with a small baby.

Not my finest hour but I lasted less than 3 months.

My neighbor has students from a football academy and a ballet school- they are late teens, and pretty much never there, and home on weekends. Not sure if you have anything like that near your location but is stress free and low maintenance all things considered. She gets about£450 a week for the board and lodging. Might be worth looking into something like this as is term time only and you have little to do for them other than evening meals. Stay out for a few months and consider all options. Good luck!

Hi @ideasoutof I'm sorry you are going through this. It's overwhelming and daunting, but you will be ok. Your mind is racing, I've found making lists helpful when I'm overwhelmed like this.

Firstly, go and view the £275k house and see what you think about it. See if it feels like a good option for you and your child.

You are in a good position because you have your large house. Get an estate agent round and get it valued.

What is the outstanding amount on your current mortgage - I'm guessing it's around 100k. Work out what the difference would be in mortgage payments per month.

If the 275k house is a good option, make an offer and see what happens. It sounds like you'd have a mortgage of 65k.

Having less debt sounds like the best option at this point in your life. You'll have cheaper rates of council tax and your energy costs will be reduced in a smaller property. You can use any surplus income to pay into or top up a pension scheme. I'm 50 and I wish I'd considered topping up my pension earlier in life.

The other option - as you said - would be to go part time in your job. Investigate this possibility at some point. That could also be a great option for now, so long as it gives you the option to increase your hours when your child is a bit older.

Good luck OP. Being a single parent is daunting but also brings great joy and a closeness with your child that cannot be matched. you sound in a good place because you have family support close by. I wish you well

I can read the panic and some posters are not being helpful.

Did you rent your house out before? Could you rent it again and rent yourself somewhere smaller. So if you get £1k in rent and rent somewhere for £600 would that help?

you would of course be liable for repairs at the house you own but could be an option

Downsize and become mortgage free. No question.

Find a babysitter and book some time with an independent financial advisor. Tell them what you’ve told us. They can help you cost out your options.

https://www.moneysavingexpert.com/savings/best-financial-advisers/

Good luck and others have said, don’t panic!

I would not move yet, if you can manage to get by for now. I used to live in a very small house when my children were young and, believe me, it starts shrinking when they get bigger! Especially when they start having friends round and want to play proper games in the garden etc. Of course, there is nothing wrong with a small house/flat, but if you already have an ideal house I would be hesitant to move at this moment. I would wait a year or so at least.