To ask how to come to terms with this financial situation

[Justcaant]

I’m 40 soon and last year separated from a long term partner. I now have our DD all week and he has her EOW. CMS is sorted but the real issue is that I now own a home alone (we rented previously as were saving for a house).

I have a 240k mortgage to pay off. I may never actually pay it off. I feel completely financially stuck. I am constantly worried about my job and bills. I have 1.5k in savings and try and add 100 a month but it’s hard. I never thought at 40 I would be in this situation. My parents are reasonably well off and I was brought up in a way that is now totally different to my daughter and I feel terrible about that too. I keep thinking I will be old and alone and unable to pay bills so end up on the streets. I am waking every day at 3am for some reason and just going over and over this and there is no way out. I wish I had made better financial decisions when younger and now it’s too late to fix it. How do I cope with this and accept where I am? I don’t want this to rub off on our child.

I do get why you're feeling the way you're feeling. When I first became a single parent my ex saddled me with a load of debt and my finances were disastrous. But you've got a lot of time between now and when you retire. Things won't stay the same as they are today. Your DD will grow up and become less dependent on you. That, in turn, will free up more time for you to look into changing career, downsizing, moving to a different area etc.

You say you don't know people working at 80 but that is the reality for most of us 50 and under. State retirement isn't until 67 to start with! Try to focus on now and not to worry about 30 years time. One thought is to try to overpay your mortgage, if mortgage rates decrease you can choose a shorter term but same cost per month or simply send extra money when you can, eg could you work extra when your dc is at their dads? Overpaying just £100 a month took years off my mortgage length

Get a lodger. You have a spare room, generate income from it.

I'd never do that while my kid lives with me, tbh. Such safeguarding risks!

Yeah things would have to be really dire before I got a lodger! You could do airbnb for the weekends when she’s with her dad but I wouldn’t move an unfamiliar adult in. Although the safeguarding risk wouldn’t be too bad with a woman but that woman might have a boyfriend so you never know. I wouldn’t like it anyway.

How long is left on your mortgage ? You know at that point it will be paid off. Plus you potentially have inheritance coming even if it's say 200k after costs you can pay your mortgage off with that and increase your savings.

I wasn't sure if it would be an option, just thought I'd mention it.

I can feel your upset through your post. I would say, keep your home. Your mortgage is relatively new and will feel more affordable in a few years. Don’t neglect a pension if you’re not already in one. Even if it’s not huge amounts at first. You’re doing great. Your daughter will grow up and leave home and when that happens when you’re older you’ll find your outgoings are less. I never had any hand outs from parents. Not everyone does. Nice if you can but if you can’t, that’s ok. I think some talking therapy would be good for you. Find out if your parents would be a buffer if you had an unexpected large bill sort of thing and they might give you comfort. Parents can often do that if they’re older and more comfortable since they haven’t had any dependents for a while. I think you’re doing great. Remember if you’re renting you have no stability and never finish paying rent. This has an end.

Have you checked if you are entitled to any support? Turn2us is a great website.

Reframe the mortgage stress - you have to live somewhere. If you were renting you'd be paying someone else's mortgage. This way your building up your own equity. The interest part is effectively rent, the capital bit is effectively savings.

What are you other outgoings? Can you cut back a bit?
Annually make sure you are using a price comparison website for all your insurances - never just accept the renewal cost without checking.
Subscriptions? Do you really need all of them?
Mobile? Go SIM only for under £10 a month.
Turn the heating down a little.
(Disclaimer - you might have all these covered already)

https://www.gov.uk/inheritance-tax/passing-on-home

@Justcaant

If you are passing a house to children or grandchildren, the tax free threshold is £500,000 before you pay anything. You would get £240,000 of the £400,000 above that, totaling £740,000. Split between yourself and sibling, this would be £370,000 each.

YOu are thinking too big - too far ahead. day by day OP

You can sell your home when your daughter is older if you need to - and downsize yourself, move somewhere cheaper.

I would suggest if you get on with your parents - sitting down with them and asking their advice.

It's a sign of anxiety when you are looking too far into the future


eg you are 40 - perhaps by 50 you will have found a partner - who can support you with bills/ pay half the rent. Life has so many twists and turns - no point getting too far ahead in your worries.

Maybe at some point you could downsize or share a home with a friend? other possibilities.

You need to watch you don't Manifest your vision.

Start to plan financially. I recommend reading some of Dave Ramseys books or watching his you tube videos.

Think positively. Look for solutions not problems.

Your still young - you can make this work.

Ive read that overpaying on a mortagage even by small amounts can have a big impact over time. I wonder if that could be possible in very small chunks

or - would your parents consider helping you increase your mortgage payments? What if they chipped in 50 a month towards the mortgage etc - and saw it as a way of helping their grandchild.

Worth an ask?

Forty is no age. You are independent. Make wise decisions for the future and live each day for what it brings. You are doing your best, don't guilt trip yourself, enjoy the time with your child and leave the rest to life.

Also remember over time your income will increase but your mortgage loan will not.
Interest rates will of course impact.

You may or may not meet someone who could share financial burden. If your daughter is still living there at 18 she can start paying a small amount of rent, or if she moves out you could downsize or get a lodger

I appreciate it is really stressful, but try to focus on the day to day.

CMS is supossed to pay towards your daughters basic needs - food, clothes etc. If there are extra curriculars your daughter wants to do but you can't afford, would your ex pay towards them?

I think the reality and unprocessed feelings of the split from your child’s father is starting to hit you- I think this is often delayed when you’re balls deep in sorting the logistics and trying to keep your head above water…maybe you were super focused on buying your house (well done by the way, that is amazing) and now it’s bought and your visitation schedule is set and everything is settled and you’re ticking along it’s like, bam. The fear of being responsible for a house and a mortgage and a child alone has hit you round the face.

Everyone can see from the outside looking in that you’re doing fantastic; you’ve bought a house and are able to save a little each month, you are providing a safe, secure home for your daughter. This is far more than many can do in the current climate. But you’re in panic mode now. I really think you need talking therapy to unpack the (totally valid) feelings around this. If you hit a mental health crisis, what then? Self care isn’t an optional luxury as a single parent, it’s essential.

The ridiculous scaremongering in the press about inheritance tax has really scrambled people’s brains. Of course tax wouldn’t mean you ended up with nothing! There are inheritance tax calculators online. Your mortgage will have a finite term - 30 years or so, I assume, so you know it will be paid off and by the time you get to the past few years the amount owed will be tiny and your property will be worth more - potentially lots more. You have a pension and will very likely inherit at some point. You are in a very favourable position, so stop catastrophising about being ‘out on the street’! It’s nonsense. You will have a fully paid off home you can live in or sell.

It's still a large inheritance.......

Inflation will also eat away at your mortgage, so it will become more manageable as time goes on. There is a good chance you will pay it off. Much more secure than renting. You have done well. It’s daunting to be doing this on your own, but you need to pause and praise yourself a little for your achievements.

But everyone pays mostly interest first.

In 5 years you'll see a shift in the amount of interest you pay and capital.
In 5 years you'll likely be earning more so the mortgage amount wont feel so huge.
In 10 years you'll be paying more off the capital and less interest and be earning loads more and be thinking about paying lump sums off.
Also if you keep saving minimum £60 every month you'll have 7k in the bank. In 10 years your child will be so much older and requiring less paid for childcare, a massive saving.

I agree with the magnesium supplements. Go buy some today, start taking them. I bet your anxiety decreases.

Agree with others - see if you can speak to your gp re the anxiety. They will help.

re the house. If you’re managing to pay the mortgage bills necessities and even save £100 a month as a single parent you’re doing amazing. It might not feel like it now, but you are.

the first few months/year of a mortgage are the toughest as you don’t ever see much of a dent being made in it. But eventually you will. You’ll see it being chipped away.

my advice would be this re the money/mortgage:

• check what type of mortgage you have and whether it lets you overpay.
• if it allows an overpayment and only if you can afford it increase your payment by say £10 a month. Every little makes a difference. - we are on a variable rate at the moment and I’ve continued to pay the “first” variable rate amount we had to pay despite there being a drop in interest rates. So we’re overpaying by £75 a month and will continue to do so until out variable term is up.
• if there’s anyway you can increase your salary do it. Are you overdue a promotion/payrise? Have you asked for more money (be prepared to back this up with why you’re deserving of it)
• would you look at changing jobs?

You have to reframe this in your mind in that people that are 70 now bought properties when they were probably younger and properties were cheaper. Unfortunately due to factors outside of your control, both personally and nationally, that was never going to be an option for you. So, please try not to compare yourself to current 70 year olds.

For context though, my parents are 70 and 75 but are still paying £800 a month in rent, because they never managed to buy a property. For every "comfortable" 70 year old you see, there are plenty that aren't as comfortable.

What's the term of your mortgage? Is it 30 years? Mortgage companies are often not keen to lend if your mortgage term is going to go beyond state pension age. We had to shorten our mortgage because of DH's age for this reason.

Ultimately, as long as your mortgage is a repayment mortgage, you will pay it off at the end of the term.

A couple of things you can do to bring that forward, that may not be a big difference on a month by month basis:

• make overpayments to your mortgage whenever you can. Ideally you could do this on a monthly basis. We've been overpaying by £100 a month since we bought our house 12 years ago, so have paid off an extra £14,000. Even £10 or £20 a month will make a difference. If you can't do this on a monthly basis, if you have a month (January and February maybe, if you don't pay council tax those months) where you have a bit spare, you could make one off extra payments.
• each time your fixed rate term comes to an end, shorten your renewal by a year or two. For example, if your rate is coming to an end and you've got 25 years left, do a renewal at 24 years. If you renew a £240k mortgage at 4.5% the monthly payment is £1,333 for 25 years or £1,364 for 24 years or £1,397 for 23 years. For an extra £64 a month you'll shorten your mortgage by two years or for £31 by one year.

The term of most mortgages is 25 years. If you are nearly 40 now, you should have paid off your mortage by the age of 65. Your retirement age is probably 67 or 68.

Could you look to progress in your career by applying for more senior and well paid roles?

"Get to 65, want to retire"

Her state retirement age will be 67, 68 or higher for people of her age

The current state retirement age is 66