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!

It sounds like you need to get a handle on your finances better, regardless.

Have you ever sat down and properly worked out your income and expenditure?

It’s not stupid - many people rule with their heart and not their head when it comes to mortgages. There is a lack of understanding how investments and interest rates work

We go away a lot as both our families live abroad so we visit a few times a year and Xmas and for a family of 5 so thats a cost.

Very much this. Unless rates are very low extending the term doesn't make that much difference to the monthly payment but increases the total amount you pay by a lot. Bad idea. And I'm not an expert but I understand that IO mortgages are much harder to come by nowadays (and in times of shaky house prices and without much prospect of rates reducing any time soon are also a bad idea). When you took the loan out in the first place it will have been stress tested to more than current rates so it should be doable, even if not palatable.

You both need to speak to a financial advisor with a very detailed list of all your income and expenditures.

Why would you do this?! For your lifestyle?!

On a £200k joint income.

Insane. Just adjust your lifestyle. You have plenty of headroom

So you do have the money, you just choose to spend it on something else. You are hardly at a risk of being homeless and you'll just need to do what the rest of us do - cut expenses, overpay the mortgage, look for better deals and trim your expenditure of "nice" things to afford necessities. And if you can't afford your house after doing all that, you make a sacrifice and move into a smaller and cheaper property.

I honestly think these posts are some sort of bizarre stealth brag as I can't conceive in any way that some who's smart enough to earn an apparently well above average salary can be so financially helpless/clueless.

It has a whiff of fake "I'm a bit ditzy me"" about it

It will do if it's simply a holiday from repaying capital. OP is saying that she thinks she can't afford the extra.

Having an interest-only mortgage on your main residence and investing the difference is pretty punchy given stock market volatility (and when I say pretty punchy, I mean inappropriate in OP's situation). If she could save the difference at a fixed rate which is higher than her fixed mortgage rate (even taking account of tax) that could work, but the downside is that she won't decrease her LTV, and I suspect she'll struggle to find the appropriate fixes. She'll also need to convince her lender that she has an appropriate way to cover the capital.

Your points about rates are better fitted to a discussion about overpayments, not interest only.

Have you considered an Offset mortgage? This links your current and savings account to your mortgage meaning you only pay interest on the outstanding balance. The downside is you don’t gain interest on the linked accounts but it saves you paying tax on interest and means you can pay off your mortgage more quickly.

Personally I’d not to interest only as at some point you have to find the money to pay off the capital.
Your best bet though is to speak to a mortgage advisor either independent or via your bank.

Is your DH trying to get you to get a handle on your finances and spending by scaring you with big numbers or do you think he's just got it wrong.

Times are likely to be tough for a while (undefined amount...), if you have uncontrolled or unclear spending now is the time to look at that especially if you've got to look at mortgage affordability.

I'm out of touch with fixed mortgages, is there any ability to fix again now with your existing lender ahead of likely rate increases? Would that get you a better longer time rate than you might see next year? It would be a gamble and you'd have up work through the numbers if it is even possible.

Good luck, I'm sorry some posters aren't very nice!

Is your husband worried about paying 4-5k per month based on his calcs? If he isn’t, and he thinks it is affordable, why don’t you start overpaying now so as when you come to remortgage you have less that you need to borrow?

I don't see the point in going interest only, the debt will still be there. You must be taking home a combined £10k or £12k per month, no? I think you all need to accept that your mortgage payment on this house will be £3k or £4k per month, and make savings elsewhere if necessary, or move house. In my opinion, circa 5% interest rates are not a temporary blip.

OP needs to know all the possible options - we have the bare bones of her finances plus some dodgy calculations. That’s why she needs to seek some proper financial advice, which is why I said I wasn’t a financial advisor but maybe I should have been more explicit and said: don’t take any financial advice from a random on MN who doesn’t know anything about your circumstances.
OP’s medium term plan is to downsize, presumably to a cheaper property so all that needs to be factored in.

Why can’t you afford £4k a month on that household income? Massive childcare costs or something?

This.

£550k mortgage at 5% (so higher interest rates than currently available) over 30 years, so your original 35 year term minus the 5 years you've already paid, works out at under £3k pm. Someone has said your monthly income would be about £10k, which sounds reasonable, so you'll still have what most people would consider to be a huge disposable income left over for bills, food, spending and saving. Nothing to be scared about.

But you definitely need to educate yourself about personal finance, otherwise you're at risk of going along with what your DP says, and tbh, he sounds either as clueless as you, or deceptive in some way.

We have an interest only mortgage and invest the difference between that & repayment (and more than that). Our repayment vehicle is sale of property (even though we are saving, the banks only count savings you have not what you might have!).

The criteria we met for Halifax were at least one salary over 100k, at least £250k of equity and no more than 50% LTV on interest only. Thing is, unless you’re going to invest the difference then I don’t think it makes sense - no one will really want to be forced to sell their home in 20 years time!

1. reoeatedly make the same bad suggestion.
2. tell OP she needs to pay for financial advice to save her from bad suggestions 😂

OP, start by running the numbers properly. Then think about whether it’s affordable if you make savings elsewhere or increase income. Discuss what you want to do longer term in the round (taking account of rates, the market generally, family plans etc). Talk to a broker as early as possible and lock in the best rate at the time (you can switch if rates drop, but this is unlikely). No need to pay for advice on a completely run of the mill situation.

OP, this is absolutely crazy.

Neither you or your partner appear to be able to do basic maths.
You are panicking over inaccurate assumptions firstly
You already have a term of 35 years - which is well above the average amd are considering extending it.
Your looking at interest only because of holidays!!!
Interest only is ridicilous when the problem is caused by holidays.
It also typically means that your way out is downsizing/sale of property.
What if there's a property crash?
You earn far too much to have such a poor understanding of your finances.

It appears that you over extended your life style if a couple earning £200k can't comfortable service this debt.

You can't have it all in life - the house you want, all the holidays you want etc.

This really is a case of your diamond shoes being too tight.

You earn £200k a year between you? You’ll be fine.

Best guess is that mortgage rates won’t fall in the next 12 months since inflation isn’t getting to target.

We did have savings btw but burnt through them when I was sick (private care). I also took time off work for over a year so we were dependent on one salary for a while. Hence the worry re affordability.

He may have said that as you might revert automatically to an un- preferential rate unless you change.

You won’t qualify for interest only as you don’t have enough equity in the house.

If you earn decent money and have a substantial mortgage how are you this will fully ignorant
about something so important?

You mortgage will go up no doubt about that.

You’re in £200k joint income now though, you could pay that mortgage off quite quickly and could definitely afford the higher payments.

The biggest financial worry here is all the “DH said”

start looking and understanding you finances. I bet you’ll suddenly realise a whole lot more …. Women who don’t have a grasp on what they really have, or don’t have, will always be at the mercy of their husbands versions of events and financial takes,