Page 15 | Mortgage hike misery 😔

Bexbiscuit · 2023-08-19T20:29:48+00:00

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?

justasking111 · 20/08/2023 12:29

The normally very well heeled in Abersoch are feeling it according to the local businesses. You can pay a million upwards for a caravan, Ferraris ten a penny. The restaurants and other business that have a short season are finding it quiet. A fine restaurant there v expensive had far fewer covers.

I suspect it's biting because their borrowings are high. For the caravan/lodge, the cars, the house, education. The pyramid of debts is terrifying.

FerryPink · 20/08/2023 13:29

justasking111 · 20/08/2023 12:29

The normally very well heeled in Abersoch are feeling it according to the local businesses. You can pay a million upwards for a caravan, Ferraris ten a penny. The restaurants and other business that have a short season are finding it quiet. A fine restaurant there v expensive had far fewer covers.

I suspect it's biting because their borrowings are high. For the caravan/lodge, the cars, the house, education. The pyramid of debts is terrifying.

I guess that's going to start to bite all the businesses that benefit from them spending money which is what the interest rate hikes were designed to do.

Utterly rubbish for those who have worked hard to build up their businesses though

Soapyspuds · 20/08/2023 13:46

perhaps by taxing the rich properly? A windfall tax on the very rich would eradicate the need for the huge hike in interest rates. But Tories won’t do that as rich vote for rich and there’s an election coming up

In what way are they not currently being taxed properly? The richest people already pay for the upkeep of the poorest people..

frippu · 20/08/2023 13:51

In what way are they not currently being taxed properly?

I personally think there is a big discrepancy in the way income is taxed vs wealth.

AchillesLastStand · 20/08/2023 14:06

Furries · 20/08/2023 04:08

I started to flick through the thread,but kind of gave up - for various reasons!

OP - the main thing that struck me, from your very first post, was that you’d been in touch with your broker as your current fix is about to expire.

My question is - how far from expiry are you? Is it six months or one month?

I just want to make sure people know that, with their current lender, you can lock in a new deal six months before your current fix ends.

So, best course of action is to do that asap. It is VERY likely that your lender will allow you to cancel that deal and sort a new one if rates drop in the meantime before your new fix starts - do make sure you check this beforehand. By booking a new deal six months in advance, with your current lender, you have secured the “worst case scenario” option.

Once you’ve done the above, do a quick check every week. Both with your current lender and comparison sites. Use the same criteria (house value, balance outstanding etc) to get comparable results.

Ive had a mortgage for a while now - and have extended for various reasons. When it’s come to renewing my fix, I have used the comparison sites. Generally, there have been options where I could have shaved a fraction of a % off the rate by choosing another lender. But, this would also mean full financial checks and a valuation. Staying with your current lender avoids this and, for me, it’s not been worth it.

I think brokers are a good service as a FTB. Am not convinced of their value after that if you are intending to stay in the same property.

If you are looking to change lender/extend the term etc. Look at the terms re overpayments. Some lenders only allow you to overpay annually by 10% of the CURRENT mortgage balance. Others allow you to overpay annually by 10% of the ORIGINAL loan amount. I completely get that overpaying is not possible for everyone, but if you are able to then the latter option is way better.

To finish, my main message is, if you have a fix coming to and end in six months - book the best deal you can with your CURRENT lender. This is then your worst-case scenario sorted. If things improve, you should be able to change. If things get worse, then you’ve beaten that situation.

oh, and my last point is - I would be avoiding the less well-known or obscure lenders at this point. Am probably being over-cautious, but having seen the collapse of most of the utility companies, I prefer feeling a bit safer by being with a more well-known lender.

This is the most sensible advice on this thread. Thank you @Furries.

PurpleButterflyWings · 20/08/2023 14:08

I do think it's rather uncalled for, and quite cruel to say 'ha ha ha! You shouldn't have got ideas above your station and thought you were better than you were, by going for a 4 or 5 bedroom detached house straight away.' I don't think there is anything really wrong with going for a bigger house to start with, as it can be a very good investment.

I mean me and DH didn't go for a 1 bed flat and then a 2 bed semi detached house, then a 3 bed detached house, then a 4 bed detached house. Like many people now, we went from a 3 bed semi to a 4 bed detached. BUT you do need to be sensible and not max yourself out!!! We didn't, and whilst we did struggle when mortgage rates went up some 2 decades ago, we didn't lose our house.

Also, the banks and building societies need to take some responsibility for lending people massive mortgages that they could only just afford to pay - and that they would struggle to afford if the interest rates went up. On the other hand, as a few posters have said, it probably wasn't a very good idea. to go and max yourself out, with interests rates being crushingly low. So yes of course, individuals have to take responsibility too. Still, it's unfair to say 'ha ha! Serves you right!' That's just not nice.

I'm very, very proud of both my adult children actually (both in long term relationships and due to get married soon,) as both of them have got their mortgage based on the wage of one of the couple only. So they've got lots and lots of wriggle room - as well as having fixed rates for another three or four years or so - both of them.

But yes, some people are certainly revelling in the misery of these mortgage rates going up, and people struggling. I know several people in social housing sitting pretty in their permanent tenancy home with their tasty £380 to £450 a month rent that's barely gone up at all - laughing at people whose mortgage has gone up from £650-£750 a month to £1100-£1300.

The reason they're laughing at them is because these very same people, are the ones who looked down their nose at people in 2 and 3 bed social housing houses, and 1 bed social housing flats, whilst they were sitting pretty in their five bed detached £450,000 house on a private estate. A few people in social housing have this 'not so smug now are ya?' attitude.

This has really levelled the playing field hasn't it? And it just goes to show. some people did borrow more than they should have., when they really didn't have the money to pay it back, if the interest rates went up. (And they WERE going to go up weren't they, as they were so LOW!)

But yeah, pretty unpleasant and rude to revel in peoples downfalls! There but by the Grace of God and all that!!!

Timetochangegonzo · 20/08/2023 14:10

In what way are they not currently being taxed properly? The richest people already pay for the upkeep of the poorest people..

most wealthy people pay very little tax as they don’t ‘earn’ incomes they get around it by owning companies and squirrelling their savings away in places where it’s not taxed.

PinkCherryBlossoms · 20/08/2023 14:12

DisquietintheRanks · 20/08/2023 10:39

And food prices? And energy prices? Clothing? I think those all accounted for a far higher proportion of household income in the 1980s. One of the reasons people are able to spend more on housing now is that the cost of many the other necessities has, in relation to income, dropped.

You may feel it was easier than now but that's not how I remember it. I remember moving into the box room (basically a walk in wardrobe off the living room) and taking in 2 lodgers to make mortgage payments.

I won't suggest that the OP considers a lodger because I've suggested that to people before and understand it's no longer considered a reasonable adjustment but that's what I would do in her place.

Show quote history

I don't feel it was easier in the 80s to buy a house than it is now, I know it was.

This is not a matter of emotions or your subjective views about your experiences. Facts don't care about your feelings. You can either accept that housing is more expensive both in real terms and in relation to earnings now, or you can be wrong. Those are your choices.

SaturdayGiraffe · 20/08/2023 14:20

Maybe the stress testing should have been far higher.

Timetochangegonzo · 20/08/2023 14:26

£100k salary doesn’t bring home £8k a month. If they both earned £50k it would be a touch over £6,000

atthebottomofthehill · 20/08/2023 14:35

SaturdayGiraffe · 20/08/2023 14:20

Maybe the stress testing should have been far higher.

Maybe it should have but how does that help everyone now?

Jackydaytona · 20/08/2023 14:45

I think the op has every right to feel upset that her mortgage is doubling.

Whatever your income, that's going to sting. Who is happy to pay so much (especially when due to the machinations of the tory party!? I do hope people remember this at the ballot box!)

Add in £2-3k pm for nursery for 2, and that's a huge chunk of £5k gone... without adding food, fuel, energy, etc

What concerns me about threads like these is.. how? How did the bank not stress test to 10%? Surely that's common sense?

And - I'm sure this doesn't apply to the op - people lie on their mortgage applications 🤷 I know someone who did this prior to the last FC (in fact was encouraged to do so by some dodgy broker) and they had to sell their massive house and have never recovered financially.

Most places round here don't offer 30 hours because it's not financially viable for them to do so.

Hope things get better for you, op. I agree with pp...don't touch the savings. You may need them. Stick them in a high rate savings account and spend the interest on "treats".

loislovesstewie · 20/08/2023 15:24

I know someone who before the crash in the1990s who would get a non status mortgage and flip the property super quick before he got into arrears. It was when property was increasing in value almost as we spoke. He was doing very nicely until suddenly nothing was selling and he got repossessed. Which adds nothing to the OPs circumstances but does show things can always change and go wrong very quickly.

saraclara · 20/08/2023 15:47

frippu · 20/08/2023 10:04

@LakieLady the key factor about salaries is what was the ratio of salaries vs house prices? You think it was higher then?

I've mentioned elsewhere that I found my 'money book' from our first year of marriage and home ownership recently. We were both teachers, and the mortgage payment on our two bed terraced house, plus endowment and home insurance took 95% of my monthly take home pay.

My kids' struggle has been different. Where we were easily able to get a 95% mortgage over 25 years, my kids had to find 15%-20% deposit and their mortgage term will probably take them past retirement. But the proportion of their take home pay that goes on their mortgage (they're also teachers) is significantly less, even now.

Youdontsay87 · 20/08/2023 16:16

frippu · 20/08/2023 11:02

FTBs today taking out 40 year mortgage terms will pay an extraordinary amount of interest on their initial loan. When interest rates rise, terms should decrease, but because that would cause an immediate correction in the housing market, the solution has been to kick it down the road for several decades, and allow longer and longer terms.

We never recovered from 08 & then Brexit & covid came along. the house price issue was kicked down the road & there's not much road left.
Now we have huge intergenerational inequality with some people having houses worth 1000% more than they paid & younger people servicing huge amounts of income in housing costs. Plus many older people have more than 1 home whereas younger people are stuck renting with a severe lack of council housing. And the small issue of ageing population with a shrinking pool of workers.
Of course some will benefit in terms of inheritance but that's going to just make this more unequal.
I don't know how it can be fixed.

Build more actual affordable housing not the £500k+ new builds they're been building would be a start. Just good solid basic low priced starter family homes so people can atleast get on the ladder. Then build more social housing not just a few allocated plots on an expensively priced estate.
The average small 3 bed family home near me is £400k minimum and we're nowhere near London. 1 bed flats around £200k most young professionals are priced out of life these days. I don't think many will afford a family and the wait list is 14 years for social housing that is now pricey in itself at over £900 a month for a 3 bed.

seekingasimplelife · 20/08/2023 17:32

With £20K in savings it will be possible to minimise most of the the impact.

Perhaps pay £500 from savings each month towards the new monthly mortgage payments until the eldest is at school. 2 years = £12K.
You will still have £8K savings buffer. Then when youngest starts school, rebuild the savings. Minimal impact of £100 increase each, per month from salaries - don't panic.

arlequin · 20/08/2023 18:03

@DisquietintheRanks why is a lodger not a reasonable adjustment? That's exactly what we've done to earn more cash and it's tax free so makes a massive difference.

mrshenny · 20/08/2023 18:46

I wouldn't personally put all your savings into it. Keep an emergency fund back just incase if you don't already. At least 10k, potentially put the rest onto the mortgage. I'd also extend the term temporarily until you don't have nursery fees. Sorry this is shit OP. 😞

Soapyspuds · 20/08/2023 19:00

I personally think there is a big discrepancy in the way income is taxed vs wealth

But specifically what wealth? Are you suggesting that high earners pay both income tax and random wealth taxes? I am far from rich and still think this is a bad idea.

ssd · 20/08/2023 22:18

Fooksticks · 20/08/2023 01:14

OP please reply

Would you come back to this shitshow if you were the OP 🙄

Nah I'd be too embarrassed

DisquietintheRanks · 20/08/2023 22:40

arlequin · 20/08/2023 18:03

@DisquietintheRanks why is a lodger not a reasonable adjustment? That's exactly what we've done to earn more cash and it's tax free so makes a massive difference.

No idea. Just know I've been shot down in flames for suggesting it on several occasions. It's apparently completely unthinkable for anyone with children to contemplate letting a stranger live I their home (I always had female lodgers, it was fine).

oakleaffy · 21/08/2023 04:35

DisquietintheRanks · 20/08/2023 22:40

No idea. Just know I've been shot down in flames for suggesting it on several occasions. It's apparently completely unthinkable for anyone with children to contemplate letting a stranger live I their home (I always had female lodgers, it was fine).

Show quote history

I have had lodgers {all young men} in the past when interest rates were massive - and DH had left - no choice but to have a lodger- one is still a friend years later. My son was young, and one baby sat while I did an evening course once a week! {he's now friends with now adult son}.

BarbaraofSeville · 21/08/2023 06:29

DisquietintheRanks · 20/08/2023 22:40

No idea. Just know I've been shot down in flames for suggesting it on several occasions. It's apparently completely unthinkable for anyone with children to contemplate letting a stranger live I their home (I always had female lodgers, it was fine).

Show quote history

I suspect its only 'unthinkable' for those too young to remember previous times like this, especially the early 1990s when people faced the choice of taking in lodgers or losing their homes.

Also many homeowners, even professionals, had second or even third jobs. I have many colleagues who did their main job in the week and worked in a bar in the evenings and at weekends.

Or downsizing if possible but selling in a difficult market could be tricky.

For some it's literally a choice of

Lodger
Second job
Downsize
Repossession

And you need to take the least unpalatable option.

But you can take a longer mortgage term, cut other costs/spending or look at the help available (short period of interest only, you could use this to save some money to use towards later payments) you should think about that too.

BarbaraofSeville · 21/08/2023 06:31

The lodger doesn't necessarily need to be a stranger anyway.

It could be someone like a graduate trainee at work who has moved for work and needs somewhere to live.

RoseMarigoldViolet · 21/08/2023 09:46

We had a lodger in the past and she was lovely. We are still friends with her now. If you choose carefully it can be a positive experience. Raising children can be a bit lonely if you are used to a very active social life. I enjoyed having another adult to chat to. Also, choosing someone who has a busy life and is not home all the time is good!