On my own and don’t know what to do… money query/mortgage

[Itsjste]

I’m 38 and owe 280k on my mortgage, on a home valued around 520k.

I am recently single and ex DP’s contribution to dd (age 4) is 200 a month. He should pay more and I will have to go to cms.

Luckily, it’s my home and he had another that he rented out that he’s moved back to. But it means that I face big financial decisions alone. I am so daunted by the future.

I have 95k in savings and my mortgage term expires in a year. I don’t know what I should be doing, should I pay in the 80k now? I do overpay around 500 a month but I feel sick with the weight of the mortgage now I am alone.

I don’t know what is best or where to start financially, I have no family to support me with these decisions and feel uncomfortable taking to friends. Any advice would be so welcome

How much is the mortgage a month? Would your salary cover it?

If speak to an IFA
could you sell and downsize?
you sound well cushioned tho with healthy savings and I’m guessing a good job

try not to stress I’m sure it’ll work out ok x

You are onky 38.dont worry yet.
When you review at end if term pay eg 50k off
Keep liquid savings in case of need

It sounds like you can easily afford it so try to relax

🫂
It’s difficult.
I would start by comparing the interest on your savings vs your mortgage.
If savings interest is higher then no brainer keep your savings.
If mortgage higher then yes overpay but keeping in mind your ability to rebuilt savings.

@BuddhaAtSea at the moment it’s 1,120 a month. I feel like I might make a mistake here as I just don’t know what’s best.

@AlloaintheMiddle thank you. My mortgage rate is currently 2.95

@Besidemyselfwithworry yes I will definitely be downsizing, I would like to reduce the mortgage under 50k even if that means living in a much smaller place

Have you made a list of all money going out and all money coming in?

What does that show? Are you in the red or black?

Don't put your savings into the mortgage without leaving yourself a cash buffer. You need some emergency funds. Overpaying doesn't entitle you to payment holidays if you have a future cash flow issue.

You could look into an offset mortgage when your deal is up possibly.

@MyNextDoorNeighbourVotesReform i have a loan I pay off 200 a month for my car

And your savings?
It’s quite low, which is good, you must be able to find a 12 months savings account with higher rate.
Once your mortgage deal is up reassess the rates.
Also can you easily save money? Or was it an inheritance?

I think perhaps I haven't explained myself well

Complete this spreadsheet and see what you come out with at the end

www.moneysavingexpert.com/banking/budget-planning/#spreadsheet

Don’t make a massive overpayment now as you’ll likely be hit with early repayment charges. With a rate under 3% I wouldn’t look to remortgage too soon. Speak to your lender, speak to a mortgage broker and make sure they look at ‘whole of market’. Many of these are free and gain commission if you remortgage with them.

@AlloaintheMiddle oh sorry. Savings are all over the place, premium bonds, a couple of isas. I am trying to save around 500 and overpay 500 but it’s leaving me with not much to live off. I’ve just felt absolutely terrified since dp moved out as embarrassingly I only lived in this house for six months before I met him and he moved in shortly after

I get it. I'm now single after a long marriage and making decisions, especially irreversible financial ones, is daunting. TBH in your shoes I'd downsize - so you can live comfortably with less mortgage going out.

@77Fee yes I have no experience at all really with all this. Definitely want to downsize. Thought the thought of moving on my own with a small child is so stressful too!

You have a decent house and can afford to over pay so I am guessing you are better than you think financially.

Look to see if you will be penalised for making a large overpayment, the terms of your mortgage might prevent you from doing that until you come to remortgage.

But you have the capacity at your age to earn more and you are sitting on a valuable piece of property. Chances are you will be fine.

@Nimblethimble i am almost 40 though. That’s what makes me so stressed. I wish I had chosen a better man and built a life together properly. It was never like that with ex DP

You’re almost 40, which looking at it another way means you have almost your whole lifetime again still to work. You have almost £100k in savings. The LTV on your mortgage is very reasonable and your current mortgage is on a low rate. Kindly, just keep doing what you’re doing and calm down.

Have you thought about a period of interest only? You seem in a rush to pay down the mortgage, but if you are planning to downsize then this may not be the best option for you. Keep your savings and invest surplus funds in savings/investments until you have decided what to do. It’s likely the returns on savings will outweigh the current interest payments.

What’s your income?

Your interest rate isn’t huge so I’d be reluctant to put your savings into the mortgage when you can get better interest on savings. If the current overpayments and savings aren’t leaving you with a lot left over I would reduce those, especially if your rate is likely to go up when you remortgage, only advantage is if overpaying adjusts your loan to value and means a better rate but you don’t need to worry about that until you remortgage. make sure some of your savings are in investment ISAs to protect against inflation.

Have a look at Rebel Finance School on FB. A different way of thinking about money and should encourage you and help you make your own decisions.

If you invest the 1k a month you have spare, the compound interest will far exceed the saving in overpayments.