mortgage dilema

[mortgageworries]

hi everyone,
I've got a dilemma. My mortgage is up for renewal Dec23. The payments will go up and it would be a struggle to pay or have any kind of lifestyle.
I'm a single mum with two kids. I've got around 28 yrs left on the current mortgage.
My options are:

1. wait and see what happens. I have a stable job and good credit rating so might get a good deal. Stay put.

the pros are: a neighbour who is a source of support, near kids school, near the gym and afterschool activities, near exciting places in the city where we live, a lot of storage and space, can host people here, friends nearby and no hassle of moving cons: we live on a main road and there is noise and pollution, house is not well insulated and heating costs a fortune, don't have money to do any renovations and deco is ok but dated 2nd option: sell the house, might be able to get £120-140k and can then try and use it as a deposit for a cheaper house to lower mortgage payments

pros: cheaper mortgage and possibly money for renovations, can make a nicer house for us, cheaper utility bills, could move away from main road, could try and choose a house near better highschool for when they go, less pollution and noise, more money for going out etc., less housework if smaller house maybe

cons: house might be away from main road but would have to be in a less exciting location, away from friends, further from their current school probably no option to walk to school, away from the supportive neighbour, less space, hassle of moving,
any advice would be highly appreciated

House price set to drop by 10% in the next 2 years.

If you wait to downgrade then the value you will 'lose' will be greater than the value you will save on a smaller house.

I'd move, myself - while the market is still fairly bouyant.

Stay. You cannot put a price on a supportive neighbour.

Don't forget to bet off the cost of moving against the money you come out with. You could make a big drop down in house quality for not much less in mortgage once you have paid stamp duty and legal fees.

You need to factor in moving costs, selling and buying costs, stamp duty.

Have you looked to see if the smaller, cheaper house exists close to the high school?

That’s what I’m thinking

This is so important especially I don’t have any family here and my kids dad neither. So my neighbour has been a saviour so many times and she is the only person who gives me real respite from the kids

Not only dad actually but also looks after my pet when I’m away, her hb helps with other things as well like garden maintenance. Also I live near my babysitter who doesn’t drive so this would be difficult

*that not dad

I think there is a reasonable chance that mortgage costs will drop over the next two years, personally I'd see out the one you are on then maybe go variable rate for a year or so before locking in again. If you move you won't realise much by the time you pay moving costs and do a bit of work on a new place.

Stay

Could you potentially go interest only for 2 years to see where interest rates are then, before going back onto a repayment mortgage? Having people close by whom you rely on can't really be replicated!

Mmmnh, I'd stay for now, not rush a decision you might regret. You have options with your mortgage eg extend your term to help soften any payment increase. It also sounds like you're in a great location and I wouldn't want to give up the supportive neighbour.

You will have to think longer term about mortgage rates though as they have been historically low and you have a long term ahead. Do you have the opportunity for career progression over time?

Mine ends Dec 23 to and I've decided that, depending on what the rates are, I am going to take the risk and go on a variable rate.

That’s an important point. So my house has been evaluated today as £280000, I have around £120000 left to pay on the mortgage so that would leave £160000. The cheapest house around the good high school would be around £220000. The cheapest house not near high school but the kids could still stay at the school where they are which goes up to GCSEs would be around £170000. However it would be a big change in living comfort potentially for the £170000. However the lower mortgage would mean we’d be actually able to have a life perhaps… so If I calculate costs of moving and stamp duty as £20000-£30000? Then really I’d need to get as cheapest house as possible for it to be worth the hassle

I work full time already and not much chance for career progression, could probably do some overtime as a freelance but it could burn me out. The current mortgage is 29 years and I’m in my 40s so couldn’t extend really. But I agree there is a lot of argument for staying

Oops I’ve just checked and I still own £150000 to the bank in mortgage so actually I’d have £130000 after the sale - all the costs, still might be worth getting a smaller house but also can see how it could just end up being a lot of hassle and we could end up without support in a similar financial situation 🤔

I think by the time you factor in your moving costs, it probably won't be worth it. How old are the kids? If you can, I would stay where you are until the kids leave school. Then have a think about what happens next.
Have you spoken to your mgage provider about options?

Will the costs of moving wipe out the savings you make.

other options are:

renegotiate the mortgage over a longer term

Get a lodger

Work more

The kids are 6 and 7 and one of the problems is that already I can’t do any renovations or repair anything and if the mortgage increase it will be even worse.
but I also think it has benefits to stay here and indeed when kids move it would be different

That’s the worry that the costs of moving wouldn’t make it worthwhile also the stress would be enormous
the other options are not possible unfortunately. There is no way I could take a lodger, the kids have their own bedrooms and then I work from my bedroom, there isn’t space for anyone else and when I have visitors my daughter sleeps with me and they sleep in her room
I also think working more would just further exhaust me and I’m already exhausted most of the time with either being at work or with the kids. Also I have a progressive hearing loss which might mean that I will actually have to work less at some point or not at all. Also just checked and the mortgage is 28years and 4 m at the moment and I’m 40 so can’t really prolong that

Stay, pros outweighs the cons.

Thank you everyone for answers, most people are staying to stay then. Lots to think about it!

Also OP you are assuming your house will even sell. The market round here has completely dried up. My house has been on the market for 2 months and we haven’t had any viewings at all the last few weeks despite lowering the price.

In the summer another house in our road sold within a week for more money than we’ve put ours on for.

Now is a very difficult time to sell.

That’s true, the real estate agent who did the evaluation seems to think it would sell as it’s a popular location and showed me houses which have sold nearby recently although having lived here I wouldn’t mind being in a quieter location away from noise and pollution and that’s right that it might not sell quick or I might to lower the price which again would make it not worthy of the hassle

The base rate will peak about 5.50% and then drop within 12 months to 4% or possibly lower depending on the measures to reduce inflation. Now is not the time to move. Think about moving to an interest only mortgage or asking for a capital repayment holiday if are struggling to afford your repayments. Banks will be required to offer forbearance options if you in potential financial difficulties