Mortgage hike misery 😔

[Bexbiscuit]

Hello,

we met with our broker today to look at our options as our fixed rate is about to expire.

the cheapest we can get is 2k a month. 2 fucking K. I cried in the car on the way home.

this is an increase of about £710 per month. We will manage it but it’s going to change our lives significantly.

we both work on good jobs with a joint income of 100k but this increase, coupled with nursery fees, utility bills etc etc we are going to be very close to the wire

just how is this situation sustainable?

I was going to suggest looking into that. Also student loan repayments go down.

Another possibility would be to look into working compressed hours. If you could both compress your hours into a 4-day week, and had different "days off", you could reduce the days you needed nursery to 3 per week.

I first bought in the 80s, and interest rates shot up towards the end of the decade. Fixed rates weren't really a thing then, either, so you had to suck it up the minute rates rose. Nearly everyone I knew with a mortgage took a lodger, so that might be an option.

Round my way, you can easily get £100+ a week for renting out a room. That would cover more than half the increase.

I also think interest rates may well start to go down soon, so going on to a variable rate for a few months might mean more pain now, but long term gain.

And take a long hard look at your outgoings. I've never yet come across someone who couldn't make some savings in outgoings.

It's like with child benefit. You can miss out as a single parent going £1 above the threshold, you'll still get it with two incomes £1 below. Pretty counter intuitive!

We have been in this position in the past when interest rates were high. I remember we were paying £2,500 for the mortgage on a 2 bedroom flat above shops, plus paying nursery fees and our income was less than yours. But you get through it.

As a basic breakdown of your costs:
£2,000 Mortgage
£2,200 Nursery
£1,800 To live on
This seems do-able? Obviously not a luxurious life but ok?

No, most definitely not.

It is also based on your individual adjusted net income, not gross, so you can in some cases earn over £100k and still be eligible. For example, you could have two parents each earning £110k and making 11% pension contributions which bring their adjusted net income below the £100k threshold.

I didn't say I was blaming anyone, but factually every so often interest rates rise and become unaffordable for some. Perfectly sensible people find that they no longer have any leeway and can't pay bills and mortgage. I'm talking from the point of view of dealing with people who were being repossessed, often small business owners, people who had been made redundant , people who were actually just like me, nice sensible people. We only make decisions on what we know at the time; it's as simple as that. We can try to mitigate against some disasters, but that isn't going to deal with every eventuality , and at the moment there are too many things going wrong. I don't suppose anyone thought we would have a pandemic or war in Ukraine but those things affect us in ways we don't consider.

I don't think you were blaming anyone...

I agree, it's totally rubbish for a lot of people.

If you just want to rant, go ahead, you're entitled to.

But if you want any type of practical advice or feedback you'll have to give more details.

You should be entitled to some free childcare. Kids are 1 and 3? Assuming they've just turned 1 and 3 you'll get 30 hrs for 3yo for 1 year until they start school, and then 15 hrs for the youngest starting next September. So a year until it starts to get better. You should also be using tax free childcare.

If you're not entitled to the childcare, why?

For this year you take a careful look at your budget. What is truly essential and what can go? Sky (sports?), subscriptions, takeaways, holidays.
These are things you should be able to afford on £100k but it's tough times and you'll have to make sacrifices.

Compressed hours is a good suggestion, if it can work for you.

But try to plan ahead and look forward to when it's better.

This! And the idea that we should all suffer high inflation just to keep mortgage interests rates low is insane. Bluntly put, high inflation destroys economies, a percentage of people losing their homes, or downsizing, does not.

This doesn't mean I don't have sympathy for the OP or am not being gouged myself - I am. But the OP has options and so do I. But all super low interest rates did, in the end, was let house prices spiral. That's done for people any favours.

so to confirm, your house hold income is £90k, and you live in an £850k house? You’ve got £500k equity?

Go tell that story to someone 10 years younger than yourself. See what their reaction is.

”As has everyone”. Again, get out of your bubble.

From what you’ve posted it sounds like there’s definitely ways you can maximise your income.

As long as you both work you are eligible for the 30 free hours from the term after your child turns three. We have a neighbour who was struggling with nursery costs, it’s taken them 9 months from when they started looking but their LO is finally starting the primary school nursery this Sept and they will be using a local childminder/school clubs for additional childcare. This is going to save them over £10,000 a year!

It is rubbish for many but, this may go against the grain, we’ve had low rates for a
long period so a lot of people have made choices to spend, not save or invest during this pre-increased rates period (I was going to say high but we’re not realistically at high rates yet), and now don’t have a financial cushion. So many colleagues who’ve enjoyed really expensive holidays, cars etc. in recent years are now really regretting these choices.

I also wouldn't put all your current savings towards reducing the mortgage - unless it makes a difference of keeping/losing the house.
Keep a buffer in case things get worse. I'd say at least half of that. And build it up further if possible, even a small amount each month.

That could well be worth looking at. When you factor in student loan repayments, tax and NI the amount you lose in net pay is often far less than you think. And if you cut a day, and have commuting costs, you save on those, too.

A friend found she and her partner were far better off when she worked 3 days pw instead of f/t.

Yes im sure when people are sitting unable to afford food, remembering the years they could will really help. You don’t have to kick people when they’re down you know?

Consider getting and interest only mortgage to tide this time when the interests are high and you are paying nursery fees. Revert to repayment as soon as children are in school. Hopefully the mortgage interests would be more reasonable by then.

By select few bearing the brunt, do you mean the mide classes/high earners?

My income per month is £1,012. My mortgage has gone from £356.80 to £710.35. My other essential outgoings can't be covered by my income. I am single, lost just over 2 stone as I eat just own brand cup a soups and I really wish I were dead.

No I think the point is

• older mortgage free people aren't
• wealthy people with lots of assets and properties aren't
• people like me who happen to have long fixes.arent (or not yet at least ) (admittedly we paid a higher rate to have a long fix

I.e. the Pain is being pushed onto renters and people with high mortgages (i.e. anyone buying in the south recently without a decent cash deposit) , rather than being shared evenly across the population

Ours went up x9. We were on a base rate tracker throughout the low interest rate years of 0.18 above base rate. We managed to absorb it but had investments which we sold and managed to bring it down to X3.

Sorry @DontBeATwatPlease focussed on the first bit of your post and missed the second. I am so sorry things are so tough. Please consider going to a food bank , there's no shame in it. Or have you tried the apps where people give away food?

Or try https://www.turn2us.org.uk/
It is a way of finding charities that might be able to help with a grant. I am a trustee of a small charity on there and we know there must be people in need in our area but are struggling to get the message out. ,

I guess most people operate in a bubble and because things have been relatively easy for said person the moment it is tougher tends to lose perspective on the bigger picture.

Indeed you are correct that there would be many people out there, not just younger people who look at someone with £90,000 income, a £850,000 home and equity of a QUARTER OF A MILLION pleading poverty as a bit tone deaf to what lots in society struggle with.

Spot on.

"This! And the idea that we should all suffer high inflation just to keep mortgage interests rates low is insane. Bluntly put, high inflation destroys economies, a percentage of people losing their homes, or downsizing, does not.

This doesn't mean I don't have sympathy for the OP or am not being gouged myself - I am. But the OP has options and so do I. But all super low interest rates did, in the end, was let house prices spiral. That's done for people any favours.

Very true. You'd struggle to find a 4-bed house for under £3k where I live (SE, but a long way from London). Four or five years ago, that would have been £2-2.5k. People have to have same sex siblings sharing until they leave home, and even people on decent incomes are getting UC because of their high rents.

I'm not a renter, I don't live in the south a d don't have a high mortgage but have to been hit to the point I stated above. But, of course, I feel really sad for the high mortgage owners who 'could. Downsize but mardy and don't really want to' or who can't afford as many holidays this year. Crying my eyes out for them.

Thank you, please ignore my previous post

Sorry I didn't list every possible category. My point is some people aren't being hit at all - the burden isn't remotely even.