Selling house due to mortgage increase

[Hairydogmummy]

Just fancied starting a bit of a support thread for anyone in this boat. We took a big step up the property ladder in the 2020 stamp duty free frenzy. Couldn't find a house we liked in budget so stretched ourselves a little to afford current place thinking we might struggle for a little bit but thought income would increase and outgoings decrease for various reasons, but that didn't happen. Not only that, but like everyone else we have the cost of living increase plus unaffordable mortgage payment rise. We're looking at £500 more a month for our mortgage next year. House is on the market but not selling so having to cut the price to get it sold and find something cheaper asap. Just wanted to feel like I'm not alone and offer a hand hold to anyone else having to do this. DH is depressed so I'm trying to stay strong but I've only just recovered from a nasty bout of severe anxiety myself. I didn't want to buy this house as I knew we would really struggle if things changed for the worse and he talked me in to it. He's now blaming himself although ive tried to reassure him. Obviously no one could predict things would get this bad!

That sounds very hard.

You tried to do a good thing, don’t beat yourselves up.

I presume you have looked at extending your term etc?

That's sounds really tough. We offered on a house last year that, given the rate rises, we absolutely wouldn't have been able to afford now. Now I feel so lucky someone else offered higher.
Could you consider renting out a room?

Thanks @PiggyInTheLidl we can't cos we already have 24 years bringing DH to 73!

@Maroon85 I don't think so...not with DH being like he is...he'd hate that at the best of times! We've racked our brains trying to come up with something. I thought interest only mortgage might be an option but apparently you can only do those if you have a plan to repay the capital and 'selling it and buying something cheaper' doesn't count. Nor does using your pension lump sum either it seems.

The advice you've been given on interest only isn't correct.

We have one via Furness, and they ask for an idea of what you could buy etc., the main thing they ask for is loan to value ratio so you'd have to own at least 40% I believe..

Maybe worth revisiting that option, it's a shame as you'll have spend stamp duty twice?

Renting rooms?

Could you rent the house out and then you rent something smaller?

Thanks @greeandorange will look into that. It's only our current lender that's said that. Am speaking to an independent broker tomorrow. Renting a room wouldn't be a no go with DH. He would hate it especially with his mental health the way it is plus wouldn't allow it as would have to use a bedroom that his kids stay in when they come over. We did think about renting it out but tbh getting a buy to let mortgage would be so expensive I doubt we'd break even.

OP, consider this option. Get a btl mortgage but rent out a single room as a house share. I am in West Midlands and in this area a single room in a house share inclusive of council tax and utilities rents for £500 pcm per room. If you have 3 bedrooms, dining room, kitchen and lounge you can let out 3 bedrooms and lounge so £2k pcm. You could rent a smaller house or flat for yourselves. Council tax and utilities can be written off against tax. Discuss with broker tomorrow. After 2 years mortgage rates could go down and you could remortgage and move back in.

What is your current rate and when does it end?

With regards to the £500 extra, is that you looking at fixed deals for 2/5/10 years?

It might be worth looking at a tracker rate for the next year or so.

Dont forget to factor in the actual cost of moving - stamp duty, solicitors, removal firm etc. You need to crunch the numbers as it may well be more economical for you to stay where you are.

@Hairydogmummy

sorry for situation but of course people could predict this and did

brexit - clearly was going to crap on the economy
epidemic - something unforeseen was bound to happen at some point

also if stretching why did you not do a longer term fixed rate to protect yourself?

inalso get your hubby led this so what are his solutions?

Definitely speak to a broker. We are on half repayment/ half interest only and the official plan to repay the interest only part of the mortgage accepted by the lender is sale of the property (we do have other plans to pay it off as well). We do have a decent amount of equity though.

With stamp duty and move costs etc it might not make a lot of sense to downsize?
I would look at extending the term/getting a lodger/ getting a second job before selling

If you're having to downsize where will his kids stay then?
You could rent out on a Mon-Fri basis so you still have the weekends with the room empty for visitors, or maybe even to a student who will go home during holidays enabling his kids to visit then.
If you couldn't find anything in budget then, are you going to be able to find something now taking into account that moving costs, stamp duty, selling fees, solicitors etc will eat up a chunk of your equity? And if you're looking for a house that is then going to have a much lower mortgage it doesn't sound like it will be easy to find all that.
If your husband was the one pushing to move and it will cost thousands to move at this stage, what does he suggest?
If he won't consider renting a room out could one or both of you get part time jobs to cover the shortfall?

Thanks for all the suggestions! I guess I was hoping to find other people in same boat. DH is clinically depressed so basically wants me to find a solution. The fact that he pushed for this house is a factor in his depression for sure. We are in a position to drop to a house £100-150k less than what ours is worth which would still have enough bedrooms luckily. Second jobs not an option. We both work very long hours in professional jobs as it is. I'm not too worried about stamp duty costs as we didn't pay much when we bought the house due to the 'holiday' so it's only what we would have paid anyway and there's no risk to our equity as we bought the house for a bargain price at the time so we would still accrue equity. I'm not that daft, I wouldn't have back down on this place otherwise. We might have predicted brexit and a small interest rate rise but no one was predicting the current situation. We've seen a house that would do us. It's just a shame we're having to go through all this. Best bet is interest only for part of it. Will see what the broker says later.

Have you done the figures?
An extra £500 a month will cost you £6000. Selling will cost you not far off that in fees etc. Theres no guarantee that mortgage costs are going to massive increase in the next 12 months.
If your house isn’t selling, it’s probably over priced. How much more are you asking than you paid for it?

My friend Airbnb's out a room with ensuite Monday night - Thursday night term time only due to his older son being at Uni, and does have 2 or 3 regulars now who book direct with her for a slightly lower fee, so manages about 50% occupancy with these (very nice ) regulars. Helps that she lives in a very short drive of a couple of major software businesses, and initially she got trade by letting their HR know of the availability, as often there are people on training courses or over for meetings etc. One of her regulars moved to Cornwall in the pandemic & works online, but still needs to visit the office for monthly meetings.
Anytime she needs extra money eg holiday/Christmas spending she advertises the unbooked days and takes adhoc extra bookings. I think she charges about £40-50/night.
I've another friend who maintains 'superhost' status of a luxury country location 1 bed annexe with kitchenette over her garage and charges £80 or so a night.

Worth considering less days more luxury at times to suit you.

We are exactly on the same boat! Bought a place in 2021, we fully renovated it and now with the increase in the interest rates we have to pay another £600 a month. We have a little one full time in nursery (which costs a bomb £2,200 a month) plus a second one coming next month. We decided to sell our place. We put it in the market and managed to get a very high offer which we didn’t expect. So we decided to rent for a while from March onwards and see what we can afford in the future. I am getting a bit depressed cause even though we are making a great profit, we renovated the place as we dreamt of, and had our sons first steps there and we were finally excited to welcome the second one and not live in a construction site anymore. But I guess that’s life. Mental health and family comes first. Houses will come and go in life

Lucky you @erakakitzi ! We should have in theory made a profit as we did ours up a bit and had got it for a good price even though was early 2021 but we've not sold it still even though we've now reduced the price and it's cheaper than the valuations!