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

@thecomedyofterrors where would you invest this? I can’t put anymore in an isa this year.

Really poor advice, from the limited information we have there is absolutely no need to go interest only. That is a bad idea. She's better paying off as much as is allowed, and downsizing.

By the time her mortgage is due for renewal next year, the interest rates may have come down again, so she could get a better deal too.

Always better to pay down the capital on your own residential home. Interest only mortgages on your own home are a bad idea.

Looks like the OP would feel real relief once she's mortgage free.

Can you pay all your bills every month from your income. Without relying on a credit card or overdraft?

if you can - there’s no rush to change anything. Take your time.

you are in a fabulous position.

Breathe, you are doing fine. Stop overpaying for now if it is making you scrimp and save. If your normal payment prior to overpaying is affordable you shouldn't worry too much. You will have a rate rise when you fix your mortgage again, but that is on the horizon so face that when it comes. I get that you worry about all that money to payback, stop worrying for now. Look on the bright side, you are 40, you are solvent, you have your own home with lots of equity. Work out your budget - what are you spending each month, you'll have a grip of it then. Paying off your mortgage fast is great, but it's not always the best approach - as others have said here, if you can get more interest in savings than your mortgage interest that might be a better option for you.

No she’s not better off paying down her mortgage, read the comment properly. Trust me I know what I am talking about!

She also isn’t going to get a better deal in the next 12 months than what she has now. The payments will go up.

Some do let you use your overpayments against future payments. Mine does (Nationwide), provided it is agreed in advance. But it depends on the mortgage provider.

But in any case, I'd agree, with the mortgage interest at about what you'd get in savings interest anyway, it doesn't particularly make sense to overpay. And overpaying a large amount may get hit with fees too - again depending on the mortgage terms.

I'd not do anything for now. You've a year of the current mortgage deal left, you seem to be fine month to month at the moment and it seems affordable, so I'd just keep going with that as before, and use the time to research options for when it comes up for renewal, so you're not rushing into anything and making a bad decision in a panic.

I would not rush to any decisions. Your mortgage rate is low and from the sound of it you are able to cover the mortgage repayments. For now I would stop the over payments and I would not use your savings just yet.

Moving and going through a divorce are both stressful events so I would not rush to move just yet especially as you have a child. There is probably a penalty to pay if you repay the mortgage early so find out when your deal expires and what the penalty is.

if your car loan is expensive you could use some of your savings to repay that.

Just for perspective, my rent on an average midlands city fo a 3 bed inner city terrace is £900.
try to get some good financial advice and see what deal you can lock in for. As you could do very well over time.
Could you extend the term to reduce the payment for a while?

You think I don't know what I'm talking about?

She'll end up paying tax on the returns so probably won't be particularly better off.

And what if the investments go wrong? OP is stressing out and advising she stops paying off capital to risk on investing may not be the wisest of advice. Some people are better off paying off mortgages as being mortgage-free gives them a sense of financial freedom.

It's always best to pay off all debts, including mortgages first, before going hard in on investments. That's the wisest road to financial freedom.

Also relax. 40 is nothing. You have lots of time and a big cash buffer and can afford your mortgage. You are doing well.

You are living in the dark ages if you thinking paying off capital is always the best solution.

She can put funds into a cash ISA with guaranteed returns higher than her interest rate she is paying on her mortgage.

😂sure ok. It's perfect acceptable to have different financial opinions without throwing insults at someone else's differing opinion.

I've managed to clear several mortgages and am worth in excess of a million despite having not worked full-time in over 13 years since having children. But what would I know 🤔

Pay off your car first.

You’re in panic mode, understandably. You don’t need to be. You can afford the repayments easily. You’re saving AND overpaying AND have a big chunk in savings. You’re doing BRILLIANTLY! Just keep doing what you’re doing. If you’re feeling the pinch don’t commit yourself to saving each month. You don’t need to. Enjoy life a bit.

Let’s be clear, the insult started with you saying my advice was poor. I agree with the other writer, she should pay her car off before the mortgage though!

A GIA account. Then move across to ISA when allowed. Do check out rebel finance. They’ve gained so much credit and equip people to make good, informed choices.

If you can afford to put £20k/ year in an ISA, you can comfortably afford a £280k mortgage.

No don’t pay off the mortgage with savings!

Invest in a S&S isa. £95k will increase loads over the years. Don’t keep it in crappy savings accounts.

Dont worry about the mortgage if you can afford to over pay that much. It sounds like you’re panicking over nothing.

Breathe OP, you’re doing great…you maybe just can’t see that right now. Recommend you have a look at Rebel Finance School (free on YT and FB) - this will give you a solid knowledge base to build your future financial decisions on.

The best advice mumsnet can give you is to see an IFA, better if they can do mortgage planning but you might have to speak to a mortgage planner/advisor for help around the mortgage.

its likely that the interest rate will be cut at least once more before your mortgage need to be re-done but getting some help/advice now will help settle your mind cos when it comes to it you will have good advice to go from

I presume this is another goady fake thread and you think you're hilarious. Nobody in your financial position could be so stupid that they need to ask the general public how to look after your money.

But on the off-chance that it's not, if you whine as much in real life, it's not surprising he left you. You have quarter of a million in equity before you're 40, another £100k in the bank, saving £500 a month and over paying what is now a fairly small mortgage by £500 a month. There are literally millions of people in this country who would kill to be in your position. You'd be better counting your blessings than your riches.

@HoskinsChoice thanks, my partner left a matter of weeks ago and I have nobody else to talk to but apparently i‘m goady. I certainly haven’t meant to come across like that and doesn’t make me feel great when no matter how fortunate you may think I am, I still feel pretty washed up and alone and facing huge responsibility

I think that you are in shock at being alone for the first time (understandably) and are worried about the responsibility but do not have an actual problem paying your mortgage and keeping afloat.

Do not panic: nothing bad is going to happen.
Plant that thought in your mind and reinforce it every day. Write it down. The initial shock of being alone will diminish over time and you will be able to steady yourself and figure out what to do. You have time and space and several options about how to arrange your finances, as others have mentioned. Downsizing is one but there are substantial moving costs to consider.

Have a look at money savings expert and begin to get an idea of what you'd like to do in a year's time. Being nearly forty is no reason to panic. These days long mortgages are not unusual and many have high or even no upper age limit for paying it off: you would pay more interest overall but your monthly payments would be lower.

Another thing to look at is whether you'd prefer a flexible mortgage that would allow you to pay off a large lump sum if your circumstances changed or if you'd simply like to have that option. With your amount of equity, savings and ability to pay, you could probably get a flexible and attractive mortgage offer from a lender such as Nationwide. I've had that and valued the flexibility to change the term, overpay monthly or overpay lump sum or even pay off the whole thing early without penalty.

If you need to know what's available to you when the time comes, you could get free mortgage information and / or mortgage through L&C. I've used them before. Other other well known and reputable brokers are available. John Charcol is another name I recall but I haven't used them.

With that amount of savings, I would try not to worry. Looking at it another way, you have around 80 months of mortgage payments saved, so even if you lost your job/had to move to a job which only covered your bills, you have over 6 years or mortgage payments saved.

I probably wouldn't downsize, unless it was to a significantly cheaper property. Moving is expensive with legal fees, stamp duty etc.

If I was you I would put around half your savings into your mortgage, keeping payments same but reducing your term, so its pretty much paid off by time DD potentially goes to university. And keep other half as a buffer. Mortgage interest is a bit more complicated, so even if interest rate is a bit lower than a savings account, paying against mortgage will still save you more longer term.

I think you are understandably anxious as all the pressure is on you now to pay every month. I don't think your thread is 'goady' at all. We currently have a mortgage of similar to you against a house worth around 800k. We need to do some work to it, have saved some but potentially need to add about 50k to our mortgage. Neither if us are huge earners (both nhs/council) and I'm stressing whether I feel comfortable to add nore to our mortgage. The economy feels quite unstable right now, so I think you are right to feel cautious, especially with everything you have been through. I hope you find a good reliable source of advice

Presumably you bought this house on your own because you could afford it. So unless your earnings are significantly less you don’t need to do anything. You certainly don’t need to overpay and the mumsnet preoccupation with paying off your mortgage early isn’t what the majority of people do.

You are in the middle of a big life change. Take a breath. Stop overpaying and just do nothing for now. See how you feel in 12 months time.