Mortgage appointment tonight. Feel like I'm suffocating

[LaraWearsZara]

I know so many will be in the same boat but I'm so scared.
We are coming off our 1.29% fix in November and the best rate we've been offered tonight is 6.14%.
We have just over £200k outstanding and its putting our mortgage up by £470 a month
How are we supposed to do this 😪
We both work full time and have 2 young children.
This is utterly shit

Gosh that's a massive jump and must be so worrying. Do you ahve any room to cut back, I appreciate it's hard with little ones.

Increase your term? Save save save until your current fix is up

Can you extend the term?

Can you extend your term? An extra year or two will make a difference to payments and you could overpay later to cancel out the difference

We've extended from 16years to 25 for example and it's making our repayment slightly less. Then when that fix ends in two years time our youngest will then qualify for the free nursery hours so we should be much better off to start overpaying or reduce the term again

I can't help but can sympathise. We've been on a tracker for years but our mortgage has gone up from around £600 a month to £1000 a month since interest rates started to rise. We're buying a new house so couldn't fix. After nearly a year of selling then chains collapsing, we're nearing the end of a sale and purchase. We have 3 weeks to exchange and complete at a rate of 4.1%. If we can't do it, we'll have to apply for a new agreement in principle and get an interest rate of 6%+

When we took our mortgage out 20 years ago we had to go on interest only as we couldn't afford the rate at around 5% due to a decrease in income. We stayed on IO for about 5 years.

We extended the term and fixed until the youngest is out of nursery. Makes it feel more manageable. Do you have enough savings to pay it down for a better LTV?

Mines going up £1000 in November. Luckily I had a big pay rise last year so I can just about afford it but I haven’t been able to save anything in the meantime, frantically paying off debt before it goes up.

Ours is going to go up by about £800. We will just about manage it but will no longer have the luxury of just spending as we please 🥲

The extra amount is WITH us extending our term from 29 years to 40
We have 60% LTV
We cannot go Interest only as we don't meet the criteria (I think it's 50% minimum LTV)
We have the option of switching to 6m of Interest only under the new mortgage charter once our current new fix kicks in at the end of November.
Our primary age DC are already in breakfast club and after school club every day at a cost to us of £120 a week so I can't increase my hours. My husband will ask work if he can go up by 1 hour a day but he's already on a 45hr contract and finds it hard that he doesn't see the children much in the week.
Our biggest debt is our stupid car which is on PCP (18m into a 4 Yr finance). We pay £350 a month for it. At the time we could afford it but now we can't, but I have no idea what options we have.
I need a car but I also need money to put down as a deposit for a new one and I don't think I'd get any equity this early on

You can give back a PCP car at any point, it may cost you something upfront depending on the value of the car but it may be better for you in the long run? Its worth having the conversation with the hire company :( sorry that you're going through this.

I didn't know you could get 40yr mortgages.

Try to give back the car. If your DH has to go in an extra hour a day to earn more to pay the mortgage but sees the kids less then that’s what you’ll have to do for the next few years at least.

Get rid of the car. You can't afford it.

Find out what your repayments are for the next 2.5yrs on the car.
Got to a site like wevuyanycar and get your car valued. If wevuyanycar value it more than the oco then get rid of it, pay off the PCP (actually wevuyanycar can do this directly) and get a cheaper one

Although I've been looking online at cars and they are all £300+ a month so I'm not sure what you can realistically do about getting a new car

When you say ‘our biggest debt’ does that mean there are also others? Have you had a good look at your overall budget? (I’m sure you have, but it’s always worth doing, things creep up and up and sometimes there’s a solution you couldn’t first see.)

If your are on a 1.29% fix at the moment, why are you on a 29 year mortgage term ?

What is the ratio of take home salary per year to total mortgage outstanding ? This should be less than 3.

I think I'm being dense - how does that help the OP?

First of all, there shouldn't be a need for someone to be on a 29 year mortgage at that sort of interest rate if the mortgage is affordable. Such a long term seems to imply that they were at the limit of affordability even before the rate rise.

There are things you can do, cut back on discretionary spending etc but ultimately if the mortgage is a long way over the limit of affordability then it doesn't matter how much you cut back on discretionary spending - cancelling netflix or baking cupcakes - you are screwed.

In that case, the best option is not to try to keep up with something that is unaffordable, but downsize to something that is. So the advice any reasonable advisor would give to someone very much depends on how affordable the mortgage is and whether there is any realistic chance of being able to service the debt in the future given the current rate expectations/payment increases.

I think you already realise but the solution is to sell the car and buy something much cheaper just to tide you over.

Hopefully interest rates will drop again in a year or 2 and then you'll maybe be able to save a little to replace the car.

put as much money as possible in to top instant access savings account for the next 5 months top ones are paying about 4% which is way more than your mortgage rate
you will need to be very frugal to find an extra £470 a month so you need to sit down with DH and work out what you can cut from your expenses and what the shortfall is that needs to be earned this weekend
you need a budget down to last penny and spreadsheets etc put money in savings accounts sinking funds the minute you are paid not what's left at end of month. You do need a tiny bit of personal spends each month at one point it was £100 between me DH and DD ( for clothes coffe out, takeaways playgroups toys occasional bottle of wine etc) we did no spend on clothes, tech etc for a year unless something actually became unwearable oir unuseable and was needed ie nothing else would do at the end of the year it was a pair of steel toed boots for DH ( can't work without them ) some underwear and a new waterproof coat for me as mine was no longer waterproof. the next year was better at £175 a month and now it is approx £100 each though I manage DD's she gets about £40 as pocket money
personally I think interest rates will go up to 7-8% then drop again in a couple of years time ( this is my opinion I have no evidence) so would advise 2 year fix

You don't have to take a fixed rate - you can go on to the standard variable rate, thats what i've always done.

Fixed rates only ever favour the lender.

30/35 year mortgages are more and more commonplace though. We took out a 35 year mortgage that will run until we're 70. Not saying it's ideal, but it's what we needed to do to get a (very average!) house in the south east.

Sometimes it's a choice between stretching yourself on a mortgage or paying an even more extortionate amount of rent. No one knew interest rates would rise so quickly. Not even the banks, or they would have stress tested higher.

Fixed rates are currently saving hundreds of thousands of people from financial ruin.

Just because over the last 10 years you would have been better off on a tracker, the standard variable rate would still have cost you substantially more than a fix. Going forward, people will be fixing for much longer because nobody needs this grief.