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.

I think the main thing is you both need to look at increasing your earning potential. You're on minimum wage and I wasn't clear what you're current income is part time, so I'm not sure what your DH's income is, but he needs to look at what he can do to increase his earning potential too.

I assume you don't live in a particularly cheap part of the country if your mortgage is £230k for a tiny house without a garden? It's not really compatible buying a house in a more expensive area when you don't have the income to support it.

OP everything about mortgages and childcare is a minefield. My parents had the same mortgage for a 30 year term, didn’t change anything and didn’t need to when they took theirs out. All of this 30 year terms with a 1, 2, 5 year fix / tracker and then on to a ridiculously pricey variable is totally misleading.

We have a rather large mortgage compared to others in our age group as we maxed out to get the bigger home from the start. It is manageable as we both got substantial payrises but when you put a child into the mix everything changes unless you have free grandparent support. Don’t beat yourself up about it, many people are in this position with ‘better’ paid jobs. Although in my situation higher salary = much more stressful role, very long hours and no work/life balance.

What helps me to sleep a little is the fact that the cost of renting has gone up substantially that we are still better off with a mortgage as it’s cheaper than renting something a similar size and the same as something much smaller.

There has been lots of good advice on here, even without the less helpful ‘husband needs to get a better paid job.’ We don’t know what the overall package he has is, you could have an amazing pension contribution!

This is likely to be short term until your child is in school and interest rates stabilise a little. I would do a 2 year fix on a longer mortgage term and overpay, save, what you can if you are able to get a better paying job. Remember on minimum wage often the childcare costs are more than your take home pay especially if you then factor in commuting costs etc. I wouldn’t worry too much.

In the medium term I would recommend looking for a job which fits with school hours. I don’t know if there is a teaching assistant role in the school you want your child to attend? I believe there may be free training courses for childcare assistants atm. Something to look into.

I was going to say similar. With a mortgage of that magnitude I would be expecting a garden. Seriously OP cast out that net further afield. You're being fleeced. I wouldn't be paying that for a pokey house!

Ours is much cheaper than that and four bedrooms with two gardens. We are not living in an area we were raised in, but had to accept moving out of our comfort zone was the only way.

Be kind to yourself and know that you are doing your best for your family. It’s really hard to make ends meet while kids are young. Lots of people struggle in these years.
I would try to keep the house you are currently in if you can as moving is costly & things will get better as children get older and you don’t have to worry about childcare & working around school hours.
You could maybe increase your hours if that works out better financially or consider term time only working as a Teaching Assistant/ school office staff etc. That’s not very well paid but it does mean no childcare costs so it works for some people.

There are many fully funded courses available to help you go full time.

However I think your prime target needs to be to take the financial pressure off immediately, and your best bet is to either increase the term, or go interest only until you have no more childcare. Then you can throw money at your mortgage.

I would say do not sell unless it's a last resort. Renting my house is dearer than it would be on a mortgage and no security.

My DS did interest only and are now on a repayment mortgage and it kept them afloat and now they're on a repayment. They moved at that stage and had equity and are now in their forever home.

Just to add you might want to use a broker to ensure that you can get a mortgage to cover your required borrowing if your overall wages have gone down, as they know the correct information to input for each lender. They can also then get you the best interest rate deal.

Speak with a good broker. They will talk you through it all and there might be options you hadn't thought of. We speak to people in positions such as yours all the time and there are often options.

Definitely claim child benefit.