To not have many options re mortgage

[Aislingk]

I’m freaking out as our fixed term mortgage runs out in July 2027. DP said currently we’d be paying between 4-5k monthly and I’m so scared. Will things change by then and what options are there!? Never done this before!

What are you paying now and what interest rate are you on?

No one not even the banks know what the situation will be in July.
You can start looking at other deals 6 months before yours ends.
I would recommend taking to a broker, they have access to deals that the general public don't.

Currently on 2.45% and paying 2.5k monthly!

...and what term is your mortgage over?

There are probably other options so don’t worry too much yet

Look online at various providers fixed rate offerings - you’re too early to switch but just see what is available

35 years

Given your current repayment on that interest rate and length of term it must have been a fairly large mortgage sum. What are your joint earnings? Presumably you stress tested against having to pay a higher interest rate before taking out?

You've not given us much information, how much is the total mortgage? how long have you been paying off, presumably you would be reaching the end of a 5 year term so have 30 years left?

But I think you can expect it to go up to £3.8-£4.1k.

Have you got any savings you can use to pay off a chunk and increase deposit?

Move to a house you can afford

Nobody really carries on paying inflated interest when their fixed rate ends. You find a better deal closer to time and remortgage. Depending on how much equity you will have by that point, you may get a much better deal or, at least a marginally better one than the variable rate your bank offers.
My mortgage interest is due to double in 2031 but I am not even remotely concerned about that because, chances are, there will be a better deal elsewhere and I am aggressively overpaying it now to get into a better LTV bracket.

We have 550,000 left and joint income of 200,000.

Yes but judging by the current world situation we’d be paying a lot more.

How much is your house and where is it to be that much? My mortgage is £200k and it is just over £1k a month. Can you downsize or move further out. It sounds like a very expensive house.

House is currently valued at 910,000 in London and we bought it for £700,000.

Your interest rate is relatively low, so yes, there is significant chance it will get higher.

You can start looking in advance (6months ?) so if a comparably acceptable rate appear, you can get it, but it is always hard to know whether it will continue going up or down.

You can shop around between providers to get the best deal - but the difference won't be huge, it is financial market lead.

You can try to get ready to overpay as much as reasonable in July, so the new monthly payment will get a bit lower (while keeping it the 35 years altogether).

Potentially, you can simulate the new monthly payments in your budget - and save the extra for the lump sum overpayment/overpay it monthly (depending on your terms).

The first end od fixed rate can be hard, but the next one will hopefully go down.

Correct but how much more would depend on whether you freeze in panic and go on variable rate or go and look for a better deal elsewhere.
You are a family of high earners, I assume you have some financial literacy to make a sensible decision.

When we took our mortgage out I played around with calculators on Money Saving Expert to understand what’s the maximum the interest rate could be before we could not afford it, and if that interest rate wasn’t really much higher than the deal I was looking at then I wasn’t leaving much wriggle room for rate rises and therefore needed to be borrowing less (I realise you’re in a slightly different scenario but I’d still have a play with those calculators and compare what you can afford to what the mortgage interest rates that are available now - it might put your mind at ease or figure out what action to take over the coming months)

Your partner is being dramatic. I’m remortgaging this month. My 520 mortgage will be 2650

Yep, theres no way round it, you (like us) secured a very low interest rate and it will increase dramatically when you come to renew. Other than move, theres not much you can do about it unfortunately.

Wow that’s a big mortgage and over a long term, what age are you? But you have a large income so presumably you have means to make a substantial overpayment before the is term ends?

So sell it and move? My 4 bed house in Essex is valued at less than £400k. No one needs a £900k house.

Your partner's calculations sound too high. How much is left on the term?

The markets are already pricing in at least 2 or 3 rate rises between now and then.

So even though no one knows what the rate will be, there's a fair assumption that 4 - 5% (at least) is almost a given.

You can try and remortgage over a longer period if you are young enough.

Otherwise you are into talking to the bank about other ways to restructure the debt or selling.

There are going to be A LOT of people in this situation in the next couple of years. If you are buying a house you would be wise to do it well within your income.

I don't rule out it going up much higher than 5% in the next few years too, given the state of the economy.

We are looking at a massive crunch with many more issues than 2008. It's could be more like 1989 in terms of people losing houses.

People need to start planning NOW and thinking about how they are going to cope with interest rate rises. It hard to see anything different at this point.

Honestly so many people haven't got a clue what is likely ahead financially for a lot. None of it is good. It is going to be a massive shock.

There are no winners here.

I can't sugar coat it.

35 years it was in 2017

Based on the sketchy detail, you'd have around 350k deposit and could then take a 300/350k mortgage if you moved and still have a lovely home thats affordable. Over pay on it when you can and then move on again when circumstances change.