Remortgage panic!

[finleysmummy]

We are due to remortgage in the summer. Following an appointment with our mortgage advisor this week I am now panicking that we are not going yo be able to afford the new rate. We haven't had the exact figures back yet but are estimated to be going up by £500-600 a month.
My husband works full time self employed and I work full time school hours. My husband is on a reasonable income, mine is ok although will never be great being in education.
We don't have flash cars, no gym memberships or debts etc. Our children do have a tutor once a week and one does rugby and the other dance. Other than that we do not have any regular outgoings on top of mortgage, food and bills.
I really don't want to have to take away the kids extra curricular hobbies (and those don't come anywhere near to the additional £600 we would need to find.

The only way I can see us being able to do this is by me giving up my career in education and moving into something else better paid. I've spent the last few years developing my career and it's really not what I would want to do. Husband could work weekends but he has a physical job and runs a business so think this would eventually take its toll physically and mentally.

Does anyone have any miracle ideas? Or have been in this position themselves? I'm sure we are not alone with the current cost of living.

I am not sure what i am expecting from this post. We are not massively well off but have never struggled massively before either so this is new stress!

Did you use an independent mortgage advisor or one connected to the mortgage you already have?

Are you able to extend the term to reduce the payments? It will cost more in interest in the long run, but may be worth it in the short term.

So sorry, no real advice. Just wanted to make sure that you have also checked what Product Transfers your current provider can offer. Sometimes this is at least as competitive as a broker can find, has fewer fees and you don't have to go through all of the financial checks as a full remortgage.

I would consider the tutor a big luxury- surely this is something you could do yourself if you feel they need extra support?

You may be able to speak to your mortgage company about extending your repayment term- eg if you have 25 years left till paying it off, remortgage at 35 years and this would decrease the monthly total. You can always decrease this again in later remortgaging cycles if rates improve.

Obviously this has downsides (less money paid off balance of mortgage per month) but we did similar recently and is perhaps the least cost to your way of life.

Another thing that might work might be a couple of shifts at the local pub in the evenings for extra cash- we also did similar for a while.

That is steep-can you shop around and get some other quotes?

When you talk about giving up your career in education, are you a teacher or a TA?

The tutors are a luxury, however one child it is a GCSE tutor that I am unable yo assist with and the other is a dyslexia specialist for my daughter. Both are secondary school but do not receive sufficient support to reach potential/ meet educational struggles.

Our mortgage advisor is independent and he is going to provide costs for various fixed terms and increasing payment terms.

I probably should have waited until our next meeting to panic when I have all the figures to work with but the panic started immediately after he quoted the approximate figures.

Tutors & after school clubs are luxuries though, so will have to be stopped if you need the money for the mortgage. Can you sell and downsize to release some equity?

This was his estimate based on the current interest rates. We do still have quite a large mortgage but it's only 40% of our property value.
I work in Welfare and Safeguarding so not TA or teacher. No chance of overtime as school budget is already over stretched.

I think my main concern is taking away from the children when it's not their problem to sort out. Obviously in worst case scenario these will have to go, but will not cover the deficit. My son is very good at rugby and plays for our city, it is also his way of managing his anxiety.
Our first thought and research will be into what we can do ourselves to raise and work for additional funds.

He is an independent mortgage advisor. Current mortgage advisor quoted double our current monthly amount if moving onto their variable which we obviously won't do.
I think we may have to consider extending the term to bring down the monthly amount slightly.

You need to do a proper budget and see what you can afford. Extending your term is an option but should be a last resort as it is costs more long term.

If you post your outgoings here or on MSE people will advise.

Wages for support staff is pitiful, I wouldn’t blame you for looking for a job outside of schools.

Not a permanent solution but could you go onto interest only for 6 months just to give yourselves some breathing space to figure next steps?

If it's a large mortgage, but only 40% of the value of the house, do you live in a particularly expensive house, or an expensive area? Is there an opportunity to get a lodger? Or downsize?

If not a lodger, maybe students? My friend makes a lot of money taking in exchange students.

Relocate? Depending on where you are in the country moving areas could give you the same size house for half the price.

While you wait for the mortgage advisor you can plug your own figures in a mortgage calculator. I have done this for a variety of rates / terms / overpayments ahead of my renewal so I have an idea of the values I could be looking at.

It's such a a big jump to accommodate with the interest rate rise. I know some people have downsized to make their budget work but that is a last resort as it is so hugely disruptive.

Could you cobble together a few approaches, maybe you could shift to interest only for a while while your dh works an additional day a week, while you look for a job with a better income? Is you GCSE child y10 or y11?

If husband is self employed - has he adjusted his pricing with inflation? A small % for every job/ client will have an impact

Figure out how much extra you can afford to pay each month, and then think about ways to make up the short coming

Your mortgage should have been stress tested, so technically you 'should' be able to afford a 7 - 8% increase (unless of course your income has reduced).

I'd extend for as long as you can. Yes it means more interest, but I don't think it's fair to give up tutors and hobbies for your kids. What's the point in living just to pay your mortgage. then you can always overpay if you can. If you are only working school hours, can you look for some work in the evenings or weekends, to supplement?

Can either of you get a second job or negotiate a raise?

This. If you need £600/ month, that's £720 including VAT (I assume he pays VAT). To give a small safety net, say he needs to bill £750 extra, on a turnover of £10k a month would mean if he can up his prices by 7.5% you've covered the shortfall.

This is my concern. It really isn't fair for the children to have to become disadvantaged and the amount we pay for tutor and those clubs is nowhere near the shortfall. They both thrive with those additional clubs and we went without other luxuries to fund these. I occasionally tutor in Easter hols so may be beneficial to look to do these in the other school holidays too.

We did talk about this. My husband probably hasn't increased his prices in relation to the current increase in cost of living. He works for regular companies so hasn't wanted to increase his prices for fear of losing the contracts but I have said this is probably something he will need to address with them.

Your mortgage should have been stress tested, so technically you 'should' be able to afford a 7 - 8% increase (unless of course your income has reduced).

Not sure anyone stress tested for gas tripling and electricity doubling, while food costs went up 30%, council tax, water, clothing and transport costs jumping and whatnot - alongside a rocketing base rate.