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Original poster

Anyone else probably going to have go sell their house if this keeps up?

82 replies

rosemarycait96 · 14/07/2023 16:30

So we sold our starter home and upsized in 2022 to a lovely 3bed house in the country, intended to be our long term, raising a family type home. To get the house we borrowed less than our maximum and repayments are about £1150pcm right now on a 2yr fix. We're living on a tight but doable budget on my husband's salary while I'm on maternity leave. It's okay for the moment.

But we are due to look for a new deal next spring. We can afford our repayments to rise by a few hundred with some cutbacks, but no way can we afford rates of 6% or more. We just can't. 4% maybe, but not 6! We're also in adverse credit (not much, but enough to lock us out of a lot of the 'better' deals) and my son is due to start nursery in February (goodbye my entire wage!)

We probably can't extend our mortgage term as that would take my husband past retirement age by the end of it, which unless I'm mistaken most lenders wouldn't allow? We have no room to take in lodgers and won't want to while we have young children. We live frugally already, we don't drink, smoke, have any debt, or eat out much.

I'm well aware we may have overborrowed and probably made a naff decision in deciding to stretch ourselves financially in order to get our dream home - we naively assumed wage increases over time would make it easier year on year.

Given everything our options are:
Sell, massively downsize
Sell up and rent, return to the market in a few years

Buying and selling simultaneously last year was so incredibly stressful, I don't think I'm ever willing to do that again. So the latter would be our most likely path. I've made my peace with the fact that we may well be forced to sell up and start again.

Anyone else in a similar position? I don't think we're alone in not having planned for this. I'm not looking for advice, just a place to moan and swap stories of woe I guess!

OP posts:
Peony654 · 14/07/2023 16:33

By 'adverse credit ' do you mean negative equity? We've just got a new mortgage which runs until my DH is 69, and we could have gone longer actually (if you can show you're contributing to a pension) but chose not to.

Reugny · 14/07/2023 16:34

Some lenders allow you to extend your term to age of 75 years.

Also the retirement age is only the age when you receive your state pension. Due to the economic situation and some people being healthier, there are OAPs who are still working over state pension age.

OhhhhhhhhBiscuits · 14/07/2023 16:35

If your budget was so tight why did you only fix for 2 years?

Could you go back to work early from maternity to try and get some more money to help when your mortgage fix is up?

Get an evening job?

To be honest if you tried to sell you may be in negative equity so it wouldn't be worth trying to sell anyway.

Reugny · 14/07/2023 16:36

@OhhhhhhhhBiscuits loads of brokers were encouraging people to fix for 2 years and as people pay their brokers for advice they follow it.

I did my own research so fixed for 5 years.

YukoandHiro · 14/07/2023 16:36

Our mortgage runs til my DH is 70 but one lender would offer us up to 75 and some are lending up to 80 in exceptional circumstances at the moment

Original poster
rosemarycait96 · 14/07/2023 16:36

Peony654 · 14/07/2023 16:33

By 'adverse credit ' do you mean negative equity? We've just got a new mortgage which runs until my DH is 69, and we could have gone longer actually (if you can show you're contributing to a pension) but chose not to.

Oh no, I mean I have a default on my credit score, which will mark my record until 2025. It locked us out of every lender except Accord!

OP posts:
Original poster
rosemarycait96 · 14/07/2023 16:37

Yes, our broker encouraged us to fix for 2 years sadly. And we listened! How wrong were we.

OP posts:
OhhhhhhhhBiscuits · 14/07/2023 16:44

Reugny · 14/07/2023 16:36

@OhhhhhhhhBiscuits loads of brokers were encouraging people to fix for 2 years and as people pay their brokers for advice they follow it.

I did my own research so fixed for 5 years.

Wow! I didn't realise so many were encouraging 2 year fix. Ours (L&C) encouraged a 5 year fix which we were going for any way. I wanted a 10 year fix but husband said 5 years probably better for more flexibility (this isn't our forever home).

GasPanic · 14/07/2023 16:48

Bad news is that rates haven't peaked yet. Good news is that you are quite a long way away from having to fix.

It's a difficult choice because on the one hand by the time you have to refix rates could be on the downward trajectory. On the other if you wait until then to sell and are forced to then the price you will get is going to be lower as the market goes down.

I suppose the real question is what options you have for reducing your expenditure or increasing your salaries.

I think if you are going to try to tough it out the best way is to start taking proactive action ASAP. That means cutting expenditure to the absolute bone and saving money for future repayments and looking for extra earning opportunities at the weekends or increasing salary. If you do this for a couple of months it should give you some idea of what is possible to achieve.

Do you have the ability to move to interest only for a few years to get over the hump ?

Reugny · 14/07/2023 16:52

@GasPanic probably better for the OP to extend the term if possible. Only so they are still paying back some of the capital as well as the interest.

Itsnotpooitschocolate · 14/07/2023 16:54

Yes our broker tried to encourage a 2 year fix as well!

Our house purchase and sale actually fell through in the end and we ended up staying put in our starter home which actually suits us fine...

I think the term "starter home" puts pressure on people to upsize when they don't actually need more space.

Original poster
rosemarycait96 · 14/07/2023 16:56

@OhhhhhhhhBiscuits how funny, we also used L&C but they advised 2 years. I'm guessing different circumstances, etc.

@GasPanic thank you, we've cut our budget to the bone recently to try and see what's achieveable. Hoping we'll have a clearer idea of what we will be doing once time comes up for renewal next year.

OP posts:
Original poster
rosemarycait96 · 14/07/2023 17:00

@Itsnotpooitschocolate wow,looks like you dodged a bullet. Our starter home was a 2 bed Barratt new build with terrible neighbours, a literal shoe box that we were going mad in due to lack of space. BUT retrospectively the better decision would have been to stay,but at the time I would have done anything to leave.

OP posts:
crochetcrazy1978 · 14/07/2023 17:01

You could also look into switching to interest only for a period if your lender allows it

3BSHKATS · 14/07/2023 17:04

My firm advice to you were somebody has been round the block a couple of times is do not panic. You probably will not need to sell the house. The lender will move heaven and earth to keep you in it. However, in the meantime, make sure that you make every single mortgage payment and every single minimum payment on credit cards get paid and all your bills are up-to-date between now and the mortgage be enough to renewal you need to be whiter than white.

Itsnotpooitschocolate · 14/07/2023 17:08

@rosemarycait96 Are they the ones that are 3m wide? So narrow and doesn't give anyone any peace from each other.

I think you made the right choice though. We had awful neighbours once (in our 3m wide Persimmon home years ago) and I'd rather have a tight budget than awful neighbours. It almost mentally broke me.

I'd find a way to stay put if possible. And be frugal. We had 2 years of having £150 left after bills and while it was a little scary at times - we still had fun. National Trust membership went a long way.

TheFlis12345 · 14/07/2023 17:09

Lots of places will extend beyond retirement age, by brother is 47 and has just taken out a very large 33 year mortgage.

Itsnotpooitschocolate · 14/07/2023 17:10

And don't forget estate agent selling fees and legal costs of selling. It won't be cheap to sell. And you need deposits to rent.

I'm team "stay put" 🩵 knuckle down, your DS is young enough to not notice a frugal life and he will be happy anyway!

Colinfromaccounts · 14/07/2023 17:10

rosemarycait96 · 14/07/2023 16:36

Oh no, I mean I have a default on my credit score, which will mark my record until 2025. It locked us out of every lender except Accord!

Show quote history

Well, this is your problem really. Can you get a better broker?

C4tastrophe · 14/07/2023 17:16

Brokers love the 2 year fix, because in 2 years they can get more commission again.
Repeat business!

KievLoverTwo · 14/07/2023 17:16

Okay, it's making me a bit mad seeing so many people say mortgage brokers advised them to fix for two years. It is NOT their job to be financial advisers, they should be presenting options and letting people decide for themselves what level of risk they are prepared to take. Anything else is utterly irresponsible. If the shit really hits the fan and people start losing their homes, these brokers may find themselves in court, and rightly so.

Anyway OP, you are sensible to start thinking about it now, but I don't think you should sink into depression and panic just yet.

They may very well let you extend to 75, it may depend on the strength of your pension contributions. They will almost certainly allow a mortgage holiday, or to go interest free for a while. And they are not allowed to instigate repossession proceedings for twelve months after the first missed mortgage payment.

I think (with no evidence) that really, lenders don't want you to lose your home. They don't want you to move to a cheaper one because they make less money out of you.

If, as is likely, many others are in the same position as you next year, the lenders are going to want to come up with another plan so that people don't lose their homes. They lose so much money through repossessions. I don't know what that plan is likely to look like. There has been talk of generational mortgages which personally I think is a horrible idea, but it's preferable to people losing their homes.

So, please don't crazy panic just yet. But do start talking to brokers six months before the fix is due to end.

KievLoverTwo · 14/07/2023 17:20

Also, I have friends in their 60s who were interest only for years and idk how this works, I think maybe they have to give the house back when they both die, or maybe their new mortgage is under 200k, but they have been able to wrangle a moderate downsize by paying up until he reaches 95. Unfortunately I don't know the precise details, I just remember him boasting he could afford to pay the new mortgage three times over (on an ambulance driver's salary) and that they would be taking it out of his pension.

Twiglets1 · 14/07/2023 17:21

From August, all the main Lenders are supposed to offer the option to extend the term (up to age 75 I think) or switch to Interest Only for 6 months as long as you aren't in arrears. I would try to stay in the house as long as possible. Although they don't all agree, many experts believe that Interest rates will start to fall towards the end of 2024.

Twiglets1 · 14/07/2023 17:24

@KievLoverTwo I think in reality the vast majority of mortgage brokers do just present the options & leave it to the client to decide.

I've never heard of them telling a client what to do, apart from on Mumsnet. If really pushed to give an opinion, they may say what they would do but ultimately of course, it is always up to the client to decide because they will be the ones left with the payments!

manontroppo · 14/07/2023 17:26

@KievLoverTwo But most mortgage brokers are financial advisors, I think- I checked because I’ve seen so many people say their broker recommended a 2 year fix when it was clearly madness, it couldn’t possibly qualify as sound financial advice!

I don’t see how a broker, who is operating as a financial advisor, could recommend such short fixes for many people when interest rates were rock bottom. I don’t think it absolves people of personal responsibility but I think there are cases where people should be going after brokers for shocking advice.