Mortgage payment increase…

[HolyGuacamole28]

Our 2 year fixed mortgage rate runs out soon. I knew we’d have to pay more but it’s going up £800 to £2.5k!!! I’m really shocked and scared. We have two kids in nursery and life is not cheap and both me and DH work already work full time. Want to cry. Anyone else facing the same?

They, and three other of the six biggest lenders put their rates up last week.

They are not happy with the prospect of a high interest rate potentially sticking til the end of 26, which is what the BoE are saying (well, they are saying inflation will drop in Spring, rise in autumn and remain high til the end of 26).

I have a great deal of sympathy for anyone caught unawares by mortgage rates.

To be fully informed you have to be all over the market like a bloody rash for six months, to expect rates to fly up from one percent to six you have to have experienced it yourself or know someone who found themselves in the complete shit in the past and told you all about it.

I suspect that happened to my parents circa 1990 but they never told 15 yo me nor later adult me the truth of what happened to home owners circa 89 and 90.

I am really sorry you have had such a nasty shock. My parents never educated me about finances and honestly I think it should be in the school system. They teach you equations you will never need to use and manual addition when everyone has a calculator in their pocket, but not how to avoid wracking up credit card debt or avoiding negative equity. It's bs.

I really hope you manage to find a solution, OP. I agree that L&C are not great. I can give you a broker name if you message me. Tiny little firm who really seem to care, and never fail to answer my questions no matter how stupid.

Pop back and let us know of any progress?

You’ve had a shock but 5-6% was always within the realms of possibility and a 2 year fix may not have been the right choice at the time if your husband’s income wasn’t stable.

Two in nursery is one of the most expensive times you’ll have. If you can get through this year, it’ll get easier. But, if your husband is working full time and bringing home very little, his self employment is a vanity project. He should be dropping his hours and picking up something part-time if you’re struggling financially or pick up more of the childcare.

£800 is a huge increase, most people would struggle to absorb that amount of increase in monthly bills. I don’t think anyone could have predicted the utter shit show that was Liz Truss or the long term impact on mortgage rates. Working full time with two small children makes it tricky to keep an eye on all the balls too so it’s easy to be caught out.

I’m sure @HolyGuacamole28 you know somethings got to give, either your DH bringing in more money, picking up some childcare to reduce costs or some other option. This isn’t your problem to resolve alone, it’s too big when you’re part of a couple.

That is crazy. 6 years and back to square one. surely renting would have been better ? x

Rents are going up all the time though as landlords are using them to pay mortgages. I suppose I do have more equity as mortgage 60k less now. Current payment is less than average rent locally. Used to be £600 or so for a 2 bed place now it’s £1000+

I really feel for families who are stuck renting privately. I grew up in social housing which was basic but security of tenure is very important.

@oiltrader I’d extend my mortgage and keep extending it as long as I could not to have to rent in these times. It's the right thing to do if you can

my friends rent has just gone up £800 a month. She can't afford it. She’s having t move into a smaller flat with her children, pay the deposit, first months rent and moving costs

Everyone on here acting like 10% deposit isn't a perfectly normal amount to put down

I dont think it is in the current climate x

I’m being offered 8% by my current lender! It’s nowhere near affordable for us- it’s a jump of £700 per month.

Does anyone know when we can remortgage or when I should start to look into it? Mines not up until July but NatWest have sent us letters already. Is it not too soon?

Definitely not too soon @Poniesandpigs The rate they've offered is crap. Find a mortgage broker. We used a local one when buying our house and she didn't charge a fee. She got us a rate of 4.2% when the news was filled with stories of 5.5%+

Thankyou @flatmop I’ll speak to a broker! DH said he thinks we should wait until the last second before switching incase things improve. I think I’ll need a new valuation to as they have valued us at 210k when houses near us have sold for 250-280k.

No idea why they have offered us such a terrible rate!

You can get a deal sorted about 6 months in advance but you're not committed until you complete - ie July. So you can keep an eye on the market but also lock in a rate now. Win win really.

Have you seen the price of houses lately? You think people are putting 10% down and getting 30-35 year mortgages for fun? 10% down is very normal, most people could probably never buy if they needed more.

We put 5% down… it was all we could scrape together with stamp duty and fees. It was still somewhere around £15k we had to pay out before any renovations.

Luckily ours has increased in value as we bought a complete wreck and now I have a ok LTV but I can see why people have small deposit mortgages.

Do it now. Mortgage offers last 6 months.

Can your husband not look after the kids in the day, get rid of the nursery fees and work his business in evenings and weekends? Is it a type of business he could stop for say 2 years while they are little and then restart? Is he actually earning a decent amount more than the fees?
If not then sounds like he needs the take on the job of finding a new mortgage provider and providing all his accounts etc
its not much of a hassle? I’m confused as to why he doesn’t want to be reassessed unless he’s earning even less than he was before..

In the current climate it is not. Banks want bigger deposits as they expect prices to fall and don't want negative equity, so they want bigger deposits to protect their investment.

Data?

Data on what? x

Banks requiring larger deposits.

They require it by charging higher interest if the LTV is 90% x, i.e. they want larger deposits x
https://moneyfactscompare.co.uk/news/mortgages/best-uk-residential-mortgage-rates-this-week/

Yes, but is there any evidence that actually lending practices have changes significantly? Or are ftb continuing to borrow 85/90% at higher rates?

I don't fit into any particular socio-economic demographic described here or elsewhere.

I can report that whilst my monthly payment may not have increased by much since my 2 yr fixed deal started in Sep 2023, this is because I fixed in Mar 2023, no longer overpay and don't owe the vast, eye-watering sums that many have been forced to take on just to put a roof over ther heads, rather than overpay a LL's mortgage.

However, the monthly mortgage interest I pay has doubled. And I owe very little in comparison to the huge mortgages that are now subject to this 'doubling' of interest rates.

Who have nothing but sympathy from me.

Definitely speak to a mortgage broker as a first step

I know you said that your husband is a low earner and won't consider giving up work to look after your 2 nursery aged kids, but it might be time he steps up! I don't mean to cause offence, but it's a team effort, and he should be working on what suits the family best. If he runs his own business (? I got that impression), could he move some of his work to the weekend and you could reduce nursery days instead? We did this with our child - my husband had flexibility so he worked Saturday instead of Friday, and I compressed my hours so I had Thursdays off. This meant we only paid for 3 days of nursery fees. is there flexibility around your jobs? Having 2 small children in nursery is definitely your big money pit, but it won't last for long - how long until your kids are school age? If you can make temporary adjustments till then it would ease the pressure immediately.

edit - oops, @fashionqueen1183 already said the same thing! Sorry, seems I skimmed badly!