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?

@Supermummy88

If you've got the best deal you can on mortgage and other bills, both working and maxed out energy wise, there are a couple of other things to consider. Depends on your situation, but putting the babies in with you and letting a bedroom is one. The other is family. Are parents/siblings in a better place than you? Would they help towards the nursery fees?

You're either going to have to extend the mortgage term (if allowed) yo lower costs, find an extra £800 a month or downsize. It's shit but realistically these are the options. Hopefully if you need to downsize you won't be in negative equity. A lot of people in the 80s lost their houses when interest rates went up and because of the housing crash still owed money to the mortgage company.

Another option I guess is asking about a mortgage holiday. For instance if you only have nursery fees to pay for a year and would then have an extra £800 it might be something the mortgage company could consider.

get a job outside London

It's not that easy. My job doesn't really exist anywhere else, the few places where it does exist outside of London, my DHs job doesn't exist. One of us could try to get a completely different job of course but firstly we'd be earning much less as we are both very highly qualified in our particular areas and would have to more or less start at the bottom if we moved fields as we'd have no experience. Secondly whenever we've tried applying for jobs in different areas, even those where we'd be starting at the bottom, we get nowhere.
Also someone needs to do the jobs in London, even those that aren't very highly paid

get a job outside London

great idea, London doesn't need essential workers! 🙄

Could you get your children sharing a room and have a lodger in the spare room? £7,500 a year tax free. Higher income than that if you are in a university town and do full board.

It isn't only the mortgage which is the problem, we've borrowed an 'affordable' amount (based on everyone here's criteria) Joint income £65k, Mortgage £165k. Rate is 2.09% until Feb 2025, what I'd absolutely bloody love to be doing right now is overpaying at this rate to build up the equity (house value currently £220k, and it's a 4 bed detached for those above who think these don't exist) However, Childcare fees for another 11 months of £1,200 a month are eating away at every spare penny. We would have had family childcare, but things prevented this (cancer, illness etc) so DS2 is in Full time and DS1 get afterschool pick up.

Add the £700 a month mortgage, to the £1,200 a month childcare, to the £350 a month grocery (which only a year ago was £100 a month less) the £200 a month utilities (which last year was around £85 a month) to the regular bills then the income doesn't go far at all. If rates stay at 6% our mortgage cost will increase by £280 a month, which we will thankfully be able to offset as DS2 will start school, but some don't have that option and it's going to be a hard going few years to try to ride out for most.

To rent a 2 bed in our area is more than our mortgage now, so what would be the point in selling up and renting for a couple of years to save?

Look, you yourself say that the fixed rate is coming to an end soon. You saw in your agreement with the bank when you got your loan commitment and you knew full well that you would be paying additional interest after the fixed amount. This is not just an increase, but a normal practice for banks. If the bank is in breach of contract and has imposed additional obligations on you, you can contact Mortgage Broker Coventry located to clarify these points. The bank offered me two options with the possibility of freezing several payments. But my rate does not suggest an interest rate increase of more than 5%, so look for compromises

Thats true, but they didnt say much either when people were getting into unmanageable debt, they encouraged it with silly HTB schemes etc.? The reality is that rates should have been at 5% YEARS ago, they have allowed a much bigger mess to happen by letting this go on for so long.

Do this. Even for a short term till you no longer have nursery fees then go back to shorter term.

With energy. I guess you have adopted all the energy saving advice around, if not do so.

See if you can claim any help.
Been in your situation and came out. Still careful.
Wish you all the best.

Not to mention the fact they thought it was a great idea to print billions out of thin air during covid!

Yes, but a lot of people I know passed that check at a point where they had two full time incomes and no children, there's no way they'd pass now.

At some point you do have to take personal responsibility for some financial planning. We found a lovely house and the bank would have lent us the money. I ran our budget numbers and it meant I couldn't afford to go on mat leave. We didn't buy it. A bank will never tell you this - I don't think they're allowed to.