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!

If you do a proper statement of affairs (there are templates on money saving expert boards) then you might get some more tangible suggestions re where you could slim budget. Eg what is your monthly income, what will the mortgage be, cost of other bills etc.

I feel for you OP, I work in the industry and its horrible seeing people worrying like this. For many, we are finding the reality isn't as bad as they were thinking, and rates have come down in the last few months (although some have risen slightly too).

We are finding people are either

Extending the term
Going interest only for a short period
Getting second (weekend/holiday time) jobs.

If you've been in the same house 16 years your mortgage should have reduced significantly, and your house value increased so a massive positive is that if your LTV is low you will have more choice of product.

If you go IO or extend the term do be aware this might mean your protection provision needs adjusting too, although you can always adjust the term back down when your next fixed rate ends, this will take discipline as costs will obviously go back up.

Thanks for your advice on this. We haven't been in the same house for 16 years, we had a small one bed flat, moved to a small two bed bungalow and then to a 3 bed bungalow that we have worked on for the last 6 years and extended considerably. The remaining mortgage is £293k but the LTV is low which is the only saving grace.
Myself and my husband are looking to try and increase both our work by a few hours each week (assuming my school get the go ahead for funding).

I agree with PP that your husband should be raising his rates in line with inflation. It really is essential otherwise he's just reducing his costs in real terms. That could be a huge solve for you.

Increasing income is always better than cutting costs to the bone IF POSSIBLE in my mind. Making more money is better than shrinking your life, although harder of course. So exhaust the possibilities of that first (while making any obvious savings, although it sounds like you're very sensible).

I'm extending by 1 year but then at the end of that period I will have paid it off altogether. I didn't want a radical alteration to my outgoings.

Did you have to go through the affordability process again or was it more straight forward with the same lender?

If you don’t want to give anything up you have to look at ways to increase your income. Weekend work, more holiday work, husband increase salary, etc.

@PeggyOlsen47

No - none at all. With Nationwide at least you don't have to go through affordability checks to switch to a new fix with them as long as you're not asking to borrow more money. I wouldn't pass the affordability checks for my mortgage now.

Your mortgage must be huge for that price hike! Is £600 a month 2% apr a year increase? What rate were you on and what rate do you expect to move to? What is the remaining balance of mortgage? My mortgage rate doubled but as my balance was low it was not as much as a jump. £500-£600 extra just on interest a month indicates very large outstanding amount?

Just saw you have been paying it off for 16 years! I have had my mortgage for 7 years next month and I have 48% LTV now.

Yes we have owned property for 16 years but not this one house. We bought a small flat, did it up and went to sell but it was the property crash in 2008 so we would have been in negative equity. So when we eventually bought the next property (a small two bed bungalow) we were technically starting from scratch. No equity in flat to put down on new house. Did the same there, did it up moved on. To our current house that we have spent the last y years doing up. One remortgage where we took an extra £20k. Now owe £290k on the remaining mortgage. We live in the South of england where property prices are through the roof. Our current house needed rewiring, whole new hearing system, new roof, was only one dbl and one single room and hadn't been decorated since the 70s and that still cost us £357k 6 years ago.

Extend the mortgage - you can always overpay the mortgage usually at 10% per year, so extending it doesn't really matter that much if it's what you need to do to afford the house.