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

[rosemarycait96]

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!

May be completely impractical but could you rent out your home and rent a smaller place for a couple of years until nursery prices drop?

Would require changing to a buy to let mortgage, but if you can get it switched and rental market is enough to cover mortgage it might help for couple of years. Perhaps you have family you could stay with for a year or two.

I had one literally last week email me and say 'a two year fix would be better surely?' when I enquired about current rates for us. (Not L&C)

Of course they are going to. On that house we were going to buy but are now not, the broker was going to get 1.5k. Why wouldn't they want to do that every 2 years instead of 5?

I suspect it's more a case that people just don't talk about it because if in financial straits they feel it was their unwise decision making causing it.

Like I say I’ve never heard of it before but I take your word for it. I would never listen to a broker anyway if I thought they were giving me bad advice. Maybe I’m just stroppy but I always decide for myself things like how long my mortgage term should be.

Team stay put, too. All your possible selling up scenarios would cost you a lot of money.

: D

Could you rent out your place and then rent somewhere else cheaper/smaller?

I know a couple of people looking to take in a lodger in order to afford the mortgage, I'm not sure if that is an option for you.

If going back to work would mean all your wage going on nursery fees could you find another job working evenings/weekends when your DH could do childcare? I know it's not ideal but just trying to think outside the box. Buying & selling houses is such an expensive thing so I would avoid if at all possible.

You could definitely extend your mortgage beyond your husband's retirement age. From memory when we took out our last mortgage the lender was willing to lend until the age of 75. Rather than the expense of moving is it worth considering just extending to the longest term the bank would possibly give you? The bank will ask you if you intend working beyond retirement age and you just say yes. You could always aim to bring the term down again or overpay in the future when the situation improves. Remember it's horribly expensive to move house, so I'd try hang onto your current home if you possibly can. In the meantime overpay by anything you can if at all possible. It means when you come to remortgage your loan will be just that little bit less.

It is a very worrying period and I feel for you. I would also say don't panic yet. No one can fully predict how the market will change - a couple of months ago people on here were predicting the housing market would collapse any minute so no point fixing mortgage rates (which I was doing at 3.99 percent for 5 years).
I'm relieved I did now but was hearing confidently that that it was risky to be locked in.

The government recently called the lenders in to urge them to consider all options for flexibility so as to prevent defaulting and repossessions which could cause a market collapse. So I think lenders will be exploring all the options - mortgage holidays, interest only etc or longer repayment periods. I am 59 and have 8 years to go on my mortgage - there is no retirement age now.

If your mortgage repayments are only £1150 a month even with a £500 increase you’re highly unlikely to find a rental cheaper then what your mortgage will be unless you want to move to a small flat In a less then desirable area.
if your wages will only cover the nursery fees then is there any point returning? Wouldn’t it make more sense to get an evening job and avoid the nursery fees all together.
it might not be as simple as that but on paper it makes no sense.

Exactly. We used L&C and they didn't 'advise' anything, they told us the options and laid out the pros and cons of each.

I remember getting it down to two products and saying "our risk appetite is virtually zero" and him saying "well risk averse lenders tend to do X, but it's entirely your decision, take as long as you need to think about it". I was also very impressed with the written rationale they give of why they recommended the final product and believe it to be affordable, I remember thinking "well we can't be suing him if we get into a pickle!".

My sil separated recently and got a mortgage until she's 75

You’ve also got a remember on a small mortgage it’s not going to be an enormous leap. I’ve got a tiny part to my Mortgage that I’ve just fixed it 4.2 for 5 years. It’s gone up from 1.9. But what that means in actual cash numbers is a whopping 30 quid.

So, if I apply the same principle to my big mortgage, it’s 90 quid a month nobody is going to die

Posted to soon. She had quite a big deposit though, probably 40- 50 % equity.

I would stay put and get yourself in the best financial position possible. Pay down as much debt as possible.
Interest only or extend the term for a few years until kids are at school then get back on repayment asap.

Nod. We have been to l&c twice and they have never offered an opinion.

Their after sales service leaves a lot to be desired... But, last time, out of 5 brokers, they also consistently got the best rates.

I can only imagine they are SO big that they are trained not to give an opinion in case they get sued.

Mine too even though I was offered ten by virgin. It's so they get their money everytime you renew. I'm seething now.

OP my MiL has repaid her mortgage about 22 years ago. The other day she surprised me by telling me that at one point they had to switch on to interest only for 4 months. She said they repaid the missed payments but it took them almost 4 years to catch them up. Their children were primarily aged and one first year secondary at the time. You could speak to your mortgage lender about going on to an interest only mortgage for 6 months. During that time rates might come downwards. If not you can ask for a further 6 months interest only. As your fix doesn't run out until next spring that would give you over 20 months to get another fix. With a young child they will try hard to keep you in the house. Try to save to the bone. Bin Xmas off and keep it very small. Your child will be happy with a few small gifts. Can you go back to work sooner? If it's a choice between being with a child everyday or saving your home and being with DC evenings and weekends I'd be choosing the latter.

There is supposed to be a new mortgage charter in place -

The Charter – agreed between the UK Government, principal mortgage lenders and the FCA – has three key elements:
• Anyone can talk to their bank or mortgage lender for information and support, and this will have no impact on their credit score.
• People can choose to swap to an interest-only mortgage or extend their mortgage term, with the option to switch back to their original mortgage deal within six months ‘no questions asked’ and with no impact on their credit score.
• Customers won’t be forced to have their homes repossessed within 12 months of their first missed payment.
There is also flexibility for customers approaching the end of a fixed rate deal; they will have the opportunity to lock in a deal up to six months ahead and still apply for any better deals that are available right up to the start of their new term. Affordability checks will be waived for those switching to a new mortgage deal if they are up to date with their payments when their fixed term ends.

www.propertymark.co.uk/resource/new-mortgage-charter-agreed.html#:~:text=Chancellor%20Jeremy%20Hunt%20MP%20has,buy%2Dto%2Dlet%20investors.

• which may hopefully help you op?

You can definitely extend the term past state retirement age. I'd look at doing that until the kids no longer need childcare.

You should be able to switch to interest only- not the answer to our prayers but def gives you breathing space

nursery is extortionate but as kids get older childcare costs tumble

I'd try and hang in on there. It's going to cost you to move so I'd save what you can now and when the fix ends dry and extend the term. They do lend past state retirement age if you say you're going to keep working. This is what my brother has to do.

Then once nursery fees are finished you can overpay and try and bring it down again.

As a PP suggested, I'd try to move to an interest only mortgage for a period of time of your lender allows it.

@3BSHKATS sadly our mortgage is large and has a fair bit remaining on it, it's 80% LTV but yeah, fairly high house prices where we are so realistically couldn't get a 3 bed for much less. We're looking at potentially paying 2k a month if its at 6%