How do people do it? Can’t afford mortgage

[MonsterTrunk]

Hello,

We are a family of three - DH, myself and our 3 year old.

So our current income is just under £50k with DH working full time and me part time. Our current mortgage Rate runs out this year and it was £900 a month and current rates are around £1300 a month. With energy rates and petrol and food and savings as we need a new roof we’re okay at the moment but that loss of £400 is going to make things very tight. Very very. As I I don’t know if we will be able to afford it.
The answer would be me working full time but then we have to pay for childcare - we have no family to help so I’d have to pay for before/after school club and holiday care, so the extra money would possibly be gone.

What do people do? The mortgage rates are a killer. We’re going to go through everything and tighten where we can and will hopefully be okay, but this situation is just awful. I didn’t realise the jump would be so high. We’ve been very lucky with our last mortgage and I realise that now.

Thank you all, so many kind people on here. Xx

Can you all sleep in the one room for a couple of years?
And take in an international student lodger.

Look after a friend's child sometimes and ask her to look after yours.

Change job hours to cut down on need for paid child care. Ride a bike to work.
Have cheap holidays swapping your house with a friend.

I don't understand why you've only been considering more work during nursery hours. Isn't DP off evenings and weekends? Can't you work then?

Or is this a do problem where he refuses to look after his own dc?

Most sensible suggestions I’ve seen on here are to ensure you’re claiming everything you’re entitled to and then looking for a job outside of working hours so you don’t pay childcare. If you’re earning NMW now you may as well pick up weekend/evening shifts in Aldi and not pay childcare?

Get a recommended mortgage adviser on the case - having recently remortgaged they go through all the affordability checks that the lenders need. You can also secure mortgage 6 months ahead which protects you if rates go up but if interest rates go down you can swap deals
Option One - Extend the term of mortgage
Option Two - interest only then pay as much as you can over each month
Option Three - Part interest only, part repayment
Good luck - being an adult sucks !!

I do work alternate Saturdays at current. I hadn’t thought about a second job, only increasing my current hours.

Put child in preschool? May be cheaper

They already are and we get free hours. Holidays are the issue as I didn’t realise free hours doesn’t cover holidays too, only term time.

It's not easy and so many people are struggling now. If it seems like they aren't then like yourselves their mortgage rate hasn't changed yet and they haven't prepared, or they're getting into debt and haven't maxed out yet.

Your options are to claim child benefit and sort out your tax-free childcare. Speak to your childcare provider and see what their terms are as although you can claim the hours (you defo can't bank them) each place will have their own rules. You fill out all your income on the online form and if you don't qualify it will state pretty much straight away. If you intend increasing your hours/income put this on the application as it needs to be your income over the entire tax year from April 2023-24.

Next is get a evening or weekend job. Something that doesn't require you to pay for additional childcare. It might not be what you want but unfortunately the only option to guarantee the extra money you need is to increase your household income. As much as you reduce your outgoings, they arr going to keep increasing as every year the gas/electric/council tax/etc increases.

Saying that's You need to really reduce whatever non-essential outgoings you have, but also be realistic. For example instead of saying you're never going to buy a coffee for a entire year, that's unachievable if youve been buying one 4 times per week. Maybe reduce it to once per week. Get rid of sky but have netflix, not essential but you also need something to enjoy.

If you usually go on holiday i would probably scrap that, but maybe book a couple of nights at a premier inn somewhere if you really need to get away.

I haven’t been on holiday in about a decade! But yes we’re looking at our finances and I’m looking at my job and things. This thread has been very useful.

What a lovely kind post.

Make sure you're getting every benefit you're entitled to and please speak to your bank. Under the mortgage charter they have to help. Although you must have a pretty big mortgage for the payments to be going up to that size? What's your income to mortgage multiple?

It’s £230k.

What is the length of your current mortgage term? You need to remortgage to extend it to 30/35 years to stretch it out whilst we have these very high interest rates. Fix for 2 years.

you could still try and save as much as you can to overpay mortgage at the end of the 2 year period if you are able to.

This gives you a buffer over the next 2 years. When interest rates go down (although likely to flatline at 3% and not lower) then you can remortgage to a lower term again or just make sure you make a monthly overpayment (making sure you don’t pay more than the circa 10% overpayment lenders tend to allow - you’d need to check.

I’d suggest you make this page your new best friend https://www.moneysavingexpert.com/budgeting-debt-help/

It’ll help you make good financial decisions.

This budget planner goes in to LOADS of detail https://www.moneysavingexpert.com/banking/budget-planning/

There absolutely will be ways you can reduce your spending. Make it a new rule that you check that website every single time you spend money!

On the job front, I’d suggest you start a specific thread about it in the employment section. Change your username if you need to, be really open about what you do now and people can help you think through what you could do - for a second job or a change of job. You write perfectly clearly, you’ve got yourself financially muddled but you’re clearly not incapable.

Things are really tough at the moment, but it does sound like there are ways that you’ll be able to help yourself a bit too.

When my DC were little DH juggled one FT and one PT job and I juggled four PT jobs.

We hardly saw each other for a couple of years but it was definitely worth it.

In your shoes I would be looking at evening/weekend work you can do when DH is looking after the DC.

@MonsterTrunk ok so that's nearly 5x your joint salary which is big. Appreciate the horse had already bolted here but this is where stress testing comes in when you're taking a mortgage out. I'm surprised the mortgage lender did this as even at the lower rate that's a good chunk of your monthly income.

I think the only way is to work more hours when the other one of you can look after your daughter. It sucks, but it is the only way I think.

Get an second evening job if possible so no childcare costs.

You need to speak to a mortgage advisor asap on a £50k combined salary with a dependent child and childcare costs, I’m surprised you were able to get such a high mortgage in the first place. When did you take it out? Was it before you had a child and worked FT?

But we didn’t get the mortgage on our currently salaries, when we got it I was in work full time and kids weren’t even a thought in the horizon.

Life changes.

OP we are considering selling and getting a very small place instead. We can't cope.
Those saying to get a different job acknowledge those jobs need to be done. But somehow think it is okay that someone is paid not very much for doing them.

Agree completely, if everyone retrained then who would do the “menial” jobs?

Can you look at extending your mortgage eg from 30 years to 35...?

How much is your mortgage now OP and how long is the term? I get you took it out pre kids and at a larger househould income but the amount you owe should be less now than it was when you first took it out. £1300 pcm is tight, but should not be catastrophic on a salary of £50k.