Mortgage crisis

[Supermummy88]

Good evening ladies!

I would just like some advice. Me and my husband are in a major panic and literally don’t know what to do and what our options are. We are currently paying £1200 a month for our mortgage and it’s manageable…we have been paying that amount for about 5 years now. Our 2 years fixed is coming to an end and we have now been quoted £2020 a month. I just don’t understand how on Earth the government think anyone can just magically pull out an extra £800 a month! Interest rates are now above 5%! We are paying an extra £120 a month now for our electricity/gas. So that’s an extra £920 a month for us. We can’t do extra jobs as we work full time already and have 2 young children. One is in nursery so we are paying fees aswel. There are no cuts that we can possibly make to be able to pay that amount every month.

Any advice please?

If it was a 1%-2% jump year on year people could weather the rises and adjust their outgoings. This is a jump from less than 1% to 6% within a matter of months!!

Again though, people may have been able to weather that jump except now they're also having to find hundreds more each month for utilities and food and fuel.

Our mortgage fix expires in June, we're looking at £800 a month more, plus an extra £150 a month on utilities, food is easily £150 a month more as well. And previously £80 on fuel is now closer to £200 a month so a £160 increase.

We stress tested to 6% for our mortgage, we didnt stress test for an extra £530 a month on "basics". So now we have to find £1300 a month, that's the equivalent of an entire salary for some people!!

We will cope, we have a bit of wriggle room and will have to likely extend our term. Many others wont though.

@FreddyHG I could borrow more because of my profession and I don't earn £300k!

Idiotic comment. I bought a one bedroom run down flat and my mortgage was £1100 per month and that was with a 20% deposit. It may come as a surprise but certain parts of the country and VERY expensive.

wtf @kirinm i bought a little 2 bed flat last year - it was 370k only had 10% deposit (that 37k that took us 10 years to save - due to paying

We had to get the term for 37 years and it costs us 1374 a month

im totally living the high life with my little flat - with my toddler shoved in a box room with just enough room for her cot and a book shelf

so horrible for people to spout off nonsense like this.

sorry i tagged the wrong person @kirinm

i meant to tag @CoastalWave

This. We had no luxuries which seem to be the norm these days. I had very few clothes. I had one smart outfit and had a pair of quick drying trousers that I wore every day with cheap tops. I had one winter coat. My baby's clothes were bought from a market stall that sold cheap seconds and the rest were swapped around with friends according to our babies' sizes. We never ate out. The only takeaway was occasionally fish and chips. We had one old car and my ex used a moped for work. We ate mostly pasta based meals. Our furniture was ancient and given by family. Not only were we paying 15%, we were in negative equity too.

These cheap rates were far from normal. Many elderly people relied on high interest on their savings and that source of expected income has been lost. So while some benefitted from low interest rates, others have struggled. Our retirement plan was based on the interest on our savings, instead we had to live off our savings and now have none.

All lenders should have ensured that borrowers could afford repayments if the rates normalised.

Many people have said to me, but the houses were so cheap and your mortgages so small, forgetting that our incomes were small too. We were allowed to borrow three times the man's income. Mine wasn't included. He was earning £3000 a year, so we borrowed £9000 and borrowed £500 deposit from family. The house then went down in value.

I know this doesn't help OP, but we had to manage with the escalating rates and lived frugally. There was no possibility of extending the term either. So get in touch with a broker and see what the best deal is available to get you through this patch.

@CoastalWave That should say we had to pay 1400 a month in rent the last few years while trying to save - our old flat we rented is probably way more expensive now !

So i suppose no matter what- if we didn't get the mortgage and chose to keep renting we were screwed either way!

i suppose we could just sell up and move into a house share with our 18 month old child to save some money and stop trying to live the high life in our tiny flat...

@DreadingWinter your post actually supports what other posters are complaining of. You were able to buy a house that cost £12,500 from your post - just over x4 your husband's annual salary.

The average salary in the UK now is £24,600, so a similar comparison is about £100,000.

The predicament of most people is not living without luxuries as you appear to suggest, 2 outfits and a winter coat, its the fact that you cannot buy a house pretty much anywhere to x4 most people's salaries.

We had no luxuries which seem to be the norm these days. I had very few clothes. I had one smart outfit and had a pair of quick drying trousers that I wore every day with cheap tops. I had one winter coat. My baby's clothes were bought from a market stall that sold cheap seconds and the rest were swapped around with friends according to our babies' sizes. We never ate out. The only takeaway was occasionally fish and chips. We had one old car and my ex used a moped for work. We ate mostly pasta based meals. Our furniture was ancient and given by family

But this is how people are living NOW as well!! People with a £1200 a month mortgage are unlikely to be spanking the rest of wardrobe full of designer gear and eating out nightly.

I dont replace clothes for me or the kids till they are falling apart, I repair whatever I can. If we're lucky we might eat out (and by that I mean Macdonalds, not an expensive Michelin star place) maybe once every 2-3 months. Pasta is a staple meal as it's cheap and all the kids will eat it.

You seem to be under some illusion that large mortgage equals expensive lifestyle. When actually large mortgage equals the only way to get on the housing ladder (or indeed large monthly rent payment as let's not pretend rents are any cheaper than a mortgage payment in many cases) and that lifestyle is basic to ensure affordability of mortgage.

Except now, even a basic lifestyle is a stretch for folk and that mortgage payment is frightening.

Is this meant to discredit what I said? I bought a one bedroom flat in London for £390k in 2016. My fixed rate at that time was 1.7%. My repayments were £1100. They went up to about £1150 when I refixed. I am now in the process of re-fixing at 4.2%. Which bit don't you believe?

Not that it's relevant but I had my DD in 2018 and still live in the same flat albeit we have renovated and it has now got a second 'box' room but didn't have that until she was 2.

@DreadingWinter sorry, thought it was £3000 deposit. Just re-read your post and you actually bought a house for £9,500 so about x3 your husband's salary - which would be about £76,000 these days. Tell me where you can buy a house for that?

Ah ignore my post then. We were both saying the same thing.

Our rent before we bought was £1700 a month so getting a mortgage of £1100 was a massive saving.

@kirinm noo sorry i tagged you by mistake!! i'm in the same boat as you! i was responding to @CoastalWave who you had been responding to

@kirinm the poster posted below that to say she tagged you in error 🙂

It just needs to be the first thing you pay and then decide what you can afford after that. A decade ago , our mortgage was 5.9% for pretty much the entire time we were paying it off and our budget revolved around it . You will probably be surprised at where you are over spending in your day to day spending . I know we were. Good luck .

Hi, I’m a mortgage broker and I would definitely advise speaking to one. There might be different options you can explore. The mortgage market feels like it’s in free fall at the moment and the way that rates are increasing is really worrying. Hope you find the right solution.

@DreadingWinter

Wages were smaller of course, but the average wage compared to average house cost is ridiculous now compared to what it was. Then they didn't take the woman's wage into account - so when you bought, what was your wage used for if the mortgage was affordable just on your husbands income? And when rates rose rapidly surely you just used your salary to contribute to the increased mortgage costs?

Our lending was based on both wages so when the rates go up we don’t have a whole ‘spare’ wage to put towards the extra payments because my wage is already going on just living.

Also not everyone has sky tv and gym memberships and eats out all the time.

twitter.com/EdConwaySky/status/1577624054718029824?s=20&t=-hFa6cTjTyrQiI6l8CgRvQ

interesting thread on affordability

In the 70s being a SAHM was expected. Not one woman with DC in my street was working. One friend had to work once her baby was six weeks as her husband was a student. That was the limit for maternity leave and there was no maternity pay. Paternal leave didn't exist at all, not even a day. I looked after my friend's DS for a small amount which helped me out. There were no nurseries in our big urban conurbation. Childminders were unregulated and usually neighbours or friends.

My situation was that I had a niche professional qualification and there were no jobs in the whole county. Even if there had been I couldn't have found satisfactory childcare, my exH was a lawyer so our income was considered high by comparison to many we knew, but it was £3000 pa.

I'm convinced that once lenders allowed a spouse's income to be included, it led to a massive hike in property prices. Also once more than 3 times income came in that did too.

My first house cost 50,000 south east 2 up 2 down. We were earning £12,000 and £15,000 respectively. Deposit was 3k. This was in 1991. (I sold it a couple of years later at the same price I paid)

that same house sells now for £280,000

my daughter and her boyfriend bought a similar house recently. Needed 40k deposit. Earning of 23k and I am guessing but not sure of about 26k. So you can see that their wages have not gone up anywhere near the price of the house.

they had to save save save save for that deposit - lived with parents never went out never got coffee. I know this because I saw it every day and luckily I didn't mind supporting her and her boyfriends parents did the same.

I don't remember ever suffering to get my deposit back in the day - we earned very normal salaries and were able to buy a very normal house. Now that is simply not possible and I wish some other people like me would admit it.

sorry I a rush not checked errors

I would not be able to sleep at night taking on a mortgage of 300K, yet I have much younger friends who think nothing of it despite being on very average earnings. Very surprised that banks allow them to borrow so much in the first place. My experience of friends seem to be that they want everything right now- the four bedroom house with home office, brand new furnishings, immaculate decor by the age of 30. What happened to waiting and getting stuff as you can afford to?

where are you in the country that £300K plus deposit buys a 4 bed home?

@DreadingWinter Well if you, and a lot of other mums, weren't working you at least had options. There would have been some capacity to take on some sort of paid work and by the time mortgage rates peaked it was more normal for the woman to work (probably because they had to!). My generation doesn't have that option because comparatively, very few people are SAHPs.

I don't think you are wrong about the last part at all. Increased lending absolutely pushed prices up, but that doesn't help the people who bought recently who were forced to either max out borrowing on both incomes, or never be able to afford to buy anything.

@Highamite I wish more people would admit that too. When my parents bought their house, the deposit was the equivalent of 3 months of my dad's salary (average salary, skilled factory worker). When we bought, our deposit was equivalent to 49 months of DHs salary, and DH (professional job, earning quite a bit more than the average wage). It's not comparable at all! And since then house prices have gone up even further.

Loads of places where you can buy a four bedroom property for £300k plus deposit. Anywhere from the midlands upwards for a start