mortgage hike

[terryorgange]

Hi,

After seeing a few similar posts on here I thought I would share our mortgage hike experience.

Next month our new rate kicks in and this means that we have to find an additional £601 per month. We knew that this was going to happen and we have looked around to find the best rate. Our new payment will be £1750 per month give or take a quid.

We do have options - we could sell up and downsize however we haven't got loads of space now so this isn't really an option. We could also extend the term however we were quite late getting on the ladder so we aren't keen on this - we'll be ready for the grave by the time it's paid off.

We are just going to have to get on with it, but it's really soul destroying to have such a chunk of our disposable income disappear. With the new mortgage payment we will have £800 per month left over after bills, essential spending and food. This £800 will have to cover everything else such as savings, holidays, days out, Christmas etc. so it won't go that far in reality

I am aware that we are one of many many couples facing this however this is so annoying

what are the actual rates we’re talking about here op

as kind of relevant

new rate will be 5.59%. Our prevous rate was a very low sub 2% rate which we knew would not last forever

That seems very high. We got just over 4% last month. It still hurt going from 1.9% though.

It's the best rate available as we had some credit issues in the past - all sorted now and no unsecured debt at all, but we're still in the process of recovering our credit scores/histories. I guess this makes the very best rates unavailable to us

Moving, even to downsize, isn't without costs.

Extend the term, live within your means, aim to overpay when you can. £800/month of disposable income wouldn't be considered a hardship by many.

Extend the term for now, later you might overpay and reduce the term back down. Look at the now and what works for you now. For us we fixed for 5 years at below 2% which will see us finish paying for children at uni. Once that is done we will be £6,300 per year better off meaning we can overpay the mortgage.

There will be costs associated with children that you won't be paying later on, ie nursery fees, childcare costs and in time your job should pay more, you can hopefully progress at work and increase your salaries. Moving house costs thousands, stamp duty, solicitors fees, searches, surveys etc, how much will that work out to be?

If you can downsize now why can't you consider downsizing much further down the line when your house has increased in value? Our house is the biggest asset we have meaning we want to stay here as long as possible before downsizing to gain as much equity as we can.

Probably should have clarified your situation was one where the mortgage holder had a poor credit history in the OP
because your new rate is certainly not the norm and would just serve to unnecessarily worry some

Yes that’s not the norm op, that’s a very high rate.

Out of interest how many years is the term and how old are you and partner?

rates should drop over coming years so highly likely once you come off this new term the next one will drop a fair bit

This happened to me many years ago. I decided to extend my mortgage whilst we had kids to put through uni. About 5 years later I remortgaged on a much better rate and overpaid once no longer having to pay kids uni money and rates were so low. I actually ended up repaying almost 8 years early. I realise this would not have been possible if mortgage rates did not go so low for many years.

I would recommend extending the term but overpaying every month so you are still paying £1750.
That way if you are having a tough month or two you have the option to pay less.