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

You're smashing life OP. Try to relax

Invest the 95k into a stocks and shares ISA. Stop the 500 a month overpayment and cut it down to a more affordable level and invest the overpayment too. Then pay the whole mortgage off at the end of the term.

The compound interest you’ll earn from long term investing will be enough to pay off the whole mortgage at the end of the term.

Only do this though if you are happy to lock away the money for 5-10 years minimum as you have to ride out the stock market through the ups and down but historically the markets always go up after a downturn.

To add - you need to invest in low cost index funds such as the S&P500 or Global All Cap. Both are available on Vanguard.

I know MN is not a fan but it’s worth asking ChatGPT to run through the figures for you.

This is a good article too and has a calculator at the end: https://monevator.com/pay-off-mortgage-or-invest/

Another vote for Rebel Finance School 👍

Ah, @Itsjste, I get how daunting it feels. I'm 53 and on my own for the first time (for different reasons to you, but still). I've always dealt with all the finances, but the thought of having to make all the decisions in life on my own is still overwhelming at times.
I don't have all the answers that you're looking for, but I would say don't rush into anything. If you've accumulated that level of savings, you've got a healthy cushion. If you're interested, I can PM you the details of a very good independent mortgage broker. I'm no expert, but I would start there and see what's possible mortgage wise. I'd also recommend getting a full picture of your income and expenditure. I've got my own Excel spreadsheet that I use, but someone up thread linked to one on the Money Expert website. I find being able to see my monthly position clearly really helpful.
You'll be fine, just breathe and take one day at a time.

@Itsjste

Give yourself time to research your options and do nothing for a few months. It sounds like you are in a good financial position and don't need to do anything quickly.

Regardless of whatever else you do seriously consider income protection insurance.

I know you must be daunted by having to make big financial decisions alone but you are in a good position. Your mortgage rate is 2.95 which is very good but after the year it is likely to go up a bit. If paying £500 overpayment every month is making it tight to live then drop overpayment back to £400. Drop savings back to £400 too. That would give you £200 every month so things wouldn't be so tight. You might want to think about insurance for mortgage in case you lose your job. Other than that you can just chug along until your mortgage expires. Do not go interest only. That was terrible advice. You probably don't need to downsoze either ATM because you are early enough to cover mortgage, bills and save and overpayment too. Relax, you have got this covered. Just wait and see what rates will be in 1 year.

Wish you had chosen a better man?

Me too.

But you get over it and survive and thrive.

Presumably you've just come out of a 5+ year relationship, and considering the pathetic contribution he's making, you feel all the weight of responsibility for your child.
I think you've got more than enough financial cushion, think about how long £95k would support you for if you lost your job and cut back to basic expenses.
I wouldn't pay the mortgage down by 80k, you'll incur early repayment charges, you're usually allowed to pay about 10% per year before you get charged.
If you don't have it already, look at income protection, life insurance, sickness insurance etc, so your child is financially protected, and take legal advice on ring-fencing any potential inheritance for your daughter, just in case the worst happens.
L&C have been mentioned on here already and I second speaking to them. They provide free mortgage and income protection advice so can help you with that side, but with almost 100k savings, and £1k per month excess funds it would be worth your while speaking to a financial advisor. Skipton building society offer a free initial consultation for financial advice so you could talk it through with someone qualified before making any decisions.

People here have gone crazy advising you to mess around with your savings but I think your struggle is emptional.

You have plenty of equity in your homr. You have plenty of savings should something go wrong. You overpay the mortgageZ you save every month. You couldn’t be doing much more right, it’s just the shock of being you own.

If things are a bit tight I’d drop the savings and overpayment by £100 each for now. You could reassess where your savings are held but really not the end of the world if they are split across different placesZ The biggest thing would be to prepare for your remortgage- get a good mortgage advisor and make sure you get the best deal possible; hold on to your lower rate for as long as pissible but have a plan for it to increase slighltlyZ sounds like you can afford it to thoughB

If it makes you feel better, I now have a £450k mortgage after divorce and only about 15 years to pay it off. That’s what was needed to buy a 3 bed semi in my town (I have 3 kids). I guess if I can’t do so then I’ll have to move. Realistically the only prospect of doing so is if I get some kind of inheritance but I can’t rely on that. It is what it is.

Downsize if possible to mortgage free home and pay off any outstanding debts at the same time.

And get on to CMS immediately.

If you are newly single, and you can afford the bills, why not stay put for a bit while you adjust?
Making all the decisions does get easier, and moving is expensive.
Do you love your house?

OP, it sounds like you’re doing well and just having a bit of a wobble, so don’t panic or do anything rash.

A couple of points-
— what’s the interest rate on your car loan and could you pay it off without penalty?
—what’s your income tax rate? Depending on the answer to this it may make more sense to stop the mortgage overpayments for now and put the money into savings instead.
-I’m not clear whether your mortgage is £280k or £80k.
-How is your pension looking and what’s it invested in?
-Are all your ISAs cash?
-Premium bonds might not be the best option for you depending on circumstances- would you be open to selling them?

I wouldn’t waste your money on an IFA- it’s not needed at all in your circs. But there are lots of ways to learn mote about personal finances- for example, the first Meaningful Money book (and podcasts etc), Rebel Finance.

That depends on his earnings. I’ve known cms to reduce what men are volunteering, telling them they owe less. And if he is volunteering that, bringing cms in may sour the relationship further. If he only left a few weeks ago, the best route might be negotiate him up now, especially if he is feeling guilty. Hard to know without more context.

OP, I understand it’s all overwhelming and horrible. I’m sorry you are going through this. But you WIll get used to thinking through these things on your own, and if you are like me, you will get pride from doing it.

For now, you are still in the very early stages, and my advice is do nothing. Make no big decisions. Keep on the same track. Your mortgage term isn’t up yet. So take a breath. Even a few weeks or months from now you will be able to think more calmly. You will also have more relevant information on interest rates etc.

For now, just take a breath and pat yourself on the back. You are doing SO great. You managed to keep your own house and keep it independently yours. (I hope that is confirmed). You have a good steady income. You have significant savings, which you have already placed in sensible, safe tax efficient places. You are overpaying your mortgage. You are really exactly where you could possibly hope to be financially in this situation. That allows you to park finances in your mind for a while. Focus on other things through this separation - your health, your DC’s wellbeing…. Your recovery and staying smart in your negotiations with your ex, to make sure you have what you deserve from him, and are protecting your assets. If the separation is only a few weeks old, then you may have agreed something verbally, but don’t assume that will stick. And make sure you aren’t walking away from more than you should. These things can make a big difference down the line.

Good luck!

You’re in a good position, you’re feeling anxious because it’s all on your shoulders, but you’re doing great.

Stay where you are and don’t make any big decisions until you’re feeling comfortable and confident. It’ll take a while to find your feet but you’ll get there.

Financially, if things are a bit tight month-to-month I’d reduce how much you overpay to £400 or £450 and savings to £450 to give you an extra £100. Aim to increase this when dd goes to school.

When it comes to time to remortgage put half your savings into the equity and keep the other half back for a buffer. Don’t downsize if you can afford to stay where you are - property is one of the best investments.

OP, sounds like ypu are just feeling vulnerable and unsure of yourself.
The facts are you have great LTV and good savings. In your position I'd be looking at an offset mortgage. This gives you a savings pot you can access eg if you lost job, needed to make repairs etc but means you dont pay as much interest each month so your monthly payment pays off more of the mortgage.
I did this after splitting and have found it the best way for me because I like having the comfort of knowing I have cash I can access for any eventualities

I would want to simplify things. I would get rid of the car finance first. Why have that when you have such a lot in savings? Then pay off a 10% overpay on the mortgage, say £30k as you already overpay a bit. Avoid charges. Put £20k into an ISA.
Certainly look at downsizing if the outstanding mortgage amount on your own bothers you. It would me. But some people are fine with it, especially if they earn well.
I'd rather have a smaller house and a simpler life. Less debt, fewer worries, more disposable income.
But the advantage, if you stay, is a very valuable house.
Good luck.

Op, how did you manage to build the savings? What is your income?

I think you are doing ok but have fear and its never wise to decisions due to panic.

With your large savings buffer you don't need to act immediately. Start looking at what mortgage costs will be, use the savings to reduce debt but keep at least 6 months living costs in an easy access account.

I don't think you need to worry too much. If you are overpaying £500 per month, you can afford your current mortgage without downsizing if you want to. You don't have to overpay, and you can afford increases when the rate ends. If you do want to downsize then fine, but I think you're in a better position than you realise.

OP, I was a first time buyer and first time Mum at age 41…today (15yrs later) I’m early retired and mortgage free. You can totally do this…you need a proper plan, but you CAN do it. Right now you need to focus on yourself and your LO.

Stop overpaying your mortgage.You're throwing away higher interest you should be receiving on your savings, assuming it's in a top paying ISA. You also say you're struggling to afford this.

If not, you can get £40k of it in a cash ISA by 6 April, and you also have your personal savings allowance.

However, it will probably be worth paying off your car loan, if the interest rate is higher than your savings. This will also lower your outgoings by £200 pm. As you have a decent amount of savings, always plan to keep a good amount as an emergency fund in case of loss of income, and to pay for big purchases like car replacement and home improvements etc without borrowing.

Follow the financial flow chart to see what needs doing in what order, especially budgeting as single parent. If your income doesn't cover your essentials, you could use your savings to top up your income.

https://ukpersonal.finance/flowchart/

Spend the next few months adjusting to your new situation, sort out your budget, and think about whether you'd benefit from moving to a cheaper property that is more affordable to you. With your current mortgage, it will likely go up a bit when you remortgage, so factor that in. Go to the CMS for child maintenance, but it doesn't sound like that can be relied upon, so regard any money received as a bonus.

He has no legal obligation to pay her anything at all until she goes through CMS. They will look at his income and calculate accordingly. Do not make the mistake of thinking you do not want to rock the boat. Make absolutely sure he is paying exactly what he should be. I had to inform the CMS of my ex’s dividend payments and they looked into this and adjusted his payments up accordingly. There was no way he was going to pay the correct amount off his own back!

Dont overpay mortgage at all, thats a cheap loan you can get a saving account to pay you more. Max out your ISAs before the cap goes down! Youre absolutely fine, dont worry. And make sure youre paying into a pension.