To feel panic to owe this much on my mortgage?

[Seoalp]

I’m 36 and recently took stock of my finances after separating from my partner and I am now a single parent to a nursery age child. I own my home but it has an outstanding mortgage of 220k. I feel that approaching 40 this is an awful situation. I have 10k savings and a car on finance. Would you downsize to remove the mortgage? I can manage the repayments but 220k feels like SO much money to owe. I am awake most nights recently worrying about it. My friends never discuss finances at all so I have no frame of reference and feel very alone.

You say you overpay but what is your interest rate on mortgage? If it’s low this is pointless your £ could be working harder
what is the interest rate on car? Usually these are high interest and make more sense to pay down first

if both below 5% you’d be better off investing the money a cash isa would pay 5% interest or a global tracker stocks and shares isa buy ups and downs

I am 46 and owe 370. I think the think to worry about is whether you can afford the monthly repayments.

I would say you're in a great position. I'm 39, have £300 in savings and am very much reliant on my husband as my job has a low wage.
Our mortgage is double yours!
If you can comfortably pay it and you have savings then what's the problem?

As someone has said, a house is good debt. It's increasing in value whilst providing somewh nice to live.
Id just make sure I can afford to keep paying it and cut back elawwh. The car on finance is what id query.

Well we owe ~£240k on a £1m property and are in our mid forties, so I think your £220k sounds not too bad! Joking aside, we are very cautious with money and although I do have some concerns about the size of our mortgage, it doesn't keep me awake at night. I think it’s a fairly standard amount - we have friends who owe more on less valuable properties, but most people our age seem to be in a similar position to us unless they’ve already inherited and have paid their mortgages off.

If I were you I would get rid of the financed car before I worried about the affordable mortgage - I hate the idea of debt (other than a mortgage), and so we just buy our cars outright and have older / crappier cars. In the long run they cost a lot less than if we were paying finance on newer fancier cars.

I'm 36 and due to living in London 18 years am not on the ladder yet, also worried about when we do get on but better than renting in old age.

See it as rent. If you can afford it, don't worry and enjoy where you live. It's called a mortgage for a reason! In twenty years time you may wish to downsize and find you have built up a nest egg towards a smaller property.

It will cost money to move eg estate agent fees, stamp duty etc plus you would probably want/need to decorate etc. Go to Moneysavingexpert and look at mortgage overpayment calculator. You'll be amazed how quickly you'll pay off as you're overpaying by £500 a month.

Hi. Am out the other end. As you would say been there done it. Etc etc. it’s scary. But manageable ..you’re strong and can cope. That says it all. Your doing a great job sit still as things could take a wrong turn if you move etc at least you no what’s in front of you there. …And all the best. Life will get better. Just when your not expecting it too .xx

You are being unreaonable.

You are under 40, you have over 50% equity, you are overpaying by a significant amount and you made £15k growth in two years.

I think this is a check your privilege situation I'm afraid. If you are really stressed I would investigate an underlying emotional cause as your situation is good on paper.

See where you are at 50, review the situation then. You can downsize at any time.

I'm a single parent in my 30s aaannd I'm literally still renting a 2 bedroom flat with no garden.

On the one hand £220,000 is a lot of money buuttt you have plenty of working years ahead of you and you're comfortable enough to pay an extra £6,000 a year?! I think you're doing fine OP

Look I was in the same place and overpaid as it meant if anything went wrong I had a safety net. You will be fine. It just feels so heavy when you are the only person bearing the burden and these concerns are normal.
I was awake for a few weeks post the upheaval of a separation and the reality of the debt.
But I am the other side of it now ! Keep over paying if rates drop, maintain the same payment.

hi op,
any separation is hard and to suddenly become the sole one in charge is very scary. Be gentle with yourself. Deep breath and one step at a time. If you start struggling with anxiety (that is lasting and growing/remaining) you will need to find a therapist.

sending a hug. You are doing great honestly.

You’ve “only” made 15k by doing absolutely nothing in 2 years? 🧐

thats life. We’re all in the same
boat. Ill be paying my mortgage back until 70 as it stands

Not unreasonable to worry if you are having financial difficulties. If you can afford to pay your mortgage then it's a good savings plan to pay off interest and as much capital as you can. Historically, property values have always increased over time so your house will appreciate and give you security later in life, when you might choose to downsize. If you are struggling with money it would be sensible to think of moving to a lower value property now and ease your budget. You have choices so you are in a good position.

You’ve “only” made 15k by doing absolutely nothing in 2 years?

She’s been working her socks off the pay the mortgage, you know the loans that prop up the banks. Paying tax etc.

generally it’s 8% a year.

£15K is nothing in normal times for house price increases.

Not UK but ours has gone up about £60K in the same time period.

I think you're in a state of heightened anxiety following your separation and having a lot more responsibility heaped on your shoulders.

If you can afford the mortgage repayments - keep making them. Downsizing is a last resort for people whose finances have spiralled out of control. You can always sell your biggest financial asset at any time - but not just because you're having a panic attack at the numbers - which actually look good for you.

The average house price is £282,000 - so your mortgage is a lot lower than most people's mortgage debts.

You've got another 30 years of working ahead of you.

The mortgage is the biggest financial commitment for all of us. It takes the biggest chunk of our monthly income. But the bigger the home, the more it increases in value, proportionally.

Simplistic scenario for illustration purposes.
Property prices increase by 10% in a year.
You own a £110k property. It's now worth £121,000.
You own a £220k property. It's now worth £242,000.

The "financial asset" value of the larger property has increased significantly more.

Very unlikely to be 8% in the UK, but even if it was… How do you think that £15K compares with someone who has been renting and no doubt paying more per month (and obviously not even building up any equity, unlike OP)?

I also own a property but count myself very lucky for this and definitely don’t view rising house prices as a good thing.

Sorry OP, I realise I’m sounding a bit rude. Separations are really hard and anxiety runs high - you absolutely have my sympathy. But it sounds like you’re in a very good financial and housing situation.

Don’t downsize, stay in the largest property you can afford. I really regret being too cautious and have never been happy in my house but also know if I’d spent only £50k more 11 years ago I’d be sitting in a much better property with significantly more equity than I have now.
That equity will increase and you are already significantly in credit, you can downsize if you need to but you are still relatively young and should aim to pay as much as you can on a more expensive property definitely.

If as you say you can manage the monthly repayments and over pay by £500 then no don't down size you have good equity of £280,000. It may not have gone up much in the last 2 years but there are many many factors driving that that will change in time.
If your mortgage for example is 25years on a 4.5% interest are making regular over payments of £500 per month you'll clear your mortgage 10yrs 5mths early saving £66,700 in interest. That's a fab position to be in.
Our mortgage is currently £350,000 on £750,000 I'm mid 40 DH 50 and I'm desperate to make overpayment to reduce and fingers crossed I'm in that luxury now.
Don't worry I know it seem insurmountable but that's just because the number is large but it is always a mid to long term gain.

Many people owe much more. If you have an affordable roof over your head, that's the priority. Not some number on a bit of paper.

Sorry if that sounds glib, it's meant to be reassuring

Don't downsize. The repayments are comfortable enough for you to overpay 500 a month. The equity should provide you with some comfort.
(For context - 43, 600k mortgage - 600k equity)

It really depends on the house value so the LTV and your salary.

A £220k mortgage at a 6% rate on a £230k house with a £30k salary is very different to a £220k mortgage at a 2% rate on a £500k house with a £75k salary.

If the mortgage repayments are manageable then do not worry, you are paying down an asset. Many people rent for more than you are paying, at least you have an end date.