Is this a risky plan as a single parent?

[Singlepp]

I can currently afford to save 950 a month. I live in constant fear of losing my job as I am so frazzled all the time with ds but so far so good… ds is 15 months.

Ex pays decent maintenance and so far this has covered all DS’s expenses including nursery.

Im aware both my job and or maintenance could change at any time, so I want to be realistic. I have so far been saving the 950 a month and have 17k. However I have a huge mortgage. If I put the 950 into my mortgage every month, then in 3 years I would owe 185k on a 560k home. Would it be silly to do this and not have cask available? I feel so stressed about the mortgage and would love to only owe 185k by age 40. But I feel I’m in such a worrying situation as a single parent. Do I just accept I will always have this massive debt or would you risk less savings and plough into paying off?

Do you have any income protection insurance etc if you lost your job? If you have more than 16k in savings you’d not get any universal credit till you’d spent your savings. A main residence ie your home is not considered part of your savings.

It's not financially the best choice to pay off the mortgage if you percent savings is higher than your percent mortgage interest. I would consider hiring a financial planner for peace of mind and possibly increasing your wealth with smart investments. You want to have 3 months of expenses in liquid cash and the rest in investments. There isn't actually a benefit you paying down the mortgage, even if that feels like the case.

Of course there’s a benefit in paying off your mortgage early - the repayments apply to the capital as opposed to the interest and significantly reduce the amount of interest you over the term pay plus reduce your loan term significantly. 🤯

Can I ask a question about this? My interest rate now is low, less than 2%, but when I remortgage in 2.5 years it might go up. The overpayment calculators don't take this into account.

So isn't it quite good to overpay quite a bit (if possible) while interest rates are low, so that the mortgage balance is lower when the interest rates will be higher?

And the benifit of keeping it as cash is increase in capital - and interest accruing at a fast rate than on the lower interest rate debt.

Charley if you keep the cash in a higher rate account than the mortgage interest rate, when the deal ends you have a choice as to add a lump sum between deals (ie original deal has 150k outstanding, but you put in 25k cash, and take out a new mortgage for 125k), or keep it as cash.

If you put it into the mortgage, and need a new roof it's harder to access.

And, on 2% mortgage interest you are highly likely to be better off keeping it as cash and gaining interest at a higher rate than paying down capital off a mortgage.

I think it's best to overpay your mortgage op

Can you take out some sort of policy that meant your mortgage was paid if you were I’ll or made redundant?

There was a post almost/identical to this a few weeks ago.
Best bet prob speak to a financial advisor.

All the advice is to keep 6 months money available to protect against redundancy etc.

Me personally, I keep a year's money tucked away for emergencies if I can, and then overpay the mortgage after that.

This

Can you downsize, so less mortgage and pressure? Xx

I’d keep it in a high savings account (my savings are with Santander at 4.5%). Keep saving and when you are due to remortgage pay off a chunk, remortgage for less and keep a rainy day fund in savings

Thats what I’d do personally

Go speak to a financial adviser.

You realise right that you can only overpay your mortgage by 10% a year - or there are high financial penalties?

Your financial adviser can also advise you on how best to invest spare cash.

And we always used to keep 2 months mortgage payments as (almost always) untouchable savings - on the basis that no job is secure.

So go speak to a financial adviser. And it doesn't hurt to talk to your mortgage bank either. They always love people with spare cash to invest.

I don't see this suggested much ,but I've been making weekly mortgage overpayments for around 5yrs - in addition to one monthly overpayment and the normal mortgage .Lone parent ,self employed so have similar worries about financial security but found it easier to break it down into chunks as I go along whilst saving at the same time. It's worked great!

when mortgage interest rates increased I didn’t reduce payments when they deceased again. That meant I paid off the mortgage a few years early. Try to ensure you have enough saved for unexpected expenses such as increased mortgage rate.

Also a single parent
Get your worry about sole earning
I'd suggest build up a good buffer of savings as an emergency fund, make sure you are paying into a pension, then start making additional payments off your mmortgage. Never leave yourself without an emergency fund then that should relieve some of the anxiety and worry over finances

I’d keep 6 months salary as savings making sure I didn’t go over the tax free allowance (or keep in a CASH ISA if you’re close to the limit) then I’d pay the mortgage off. Best of both worlds.

Even better if you have an offset mortgage as you can keep the savings separate and adjust mortgage payments as needed.

I was in exactly this situation as single parent but without maintenance. Not sure if it’s best solution but I got a mortgage I can overpay but borrow back if necessary. I am in a situation now where I may need to borrow back a little because of ill health but there is access. Saved a lot on interest and took stress out

Money Saving Expert have a great guide on this. For most people, they advise putting your money in a savings account until your term ends (assuming that you can make more interest on your savings than you're paying on your mortgage), then paying down your mortgage when you remortgage if needed / desired. There are no overpayment charges when you're remortgaging, so you don't need to worry about that - you can pay in as much as you want at that point. Best of both worlds - security for unanticipated expenses, but also the option to reduce your mortgage debt later down the line.