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!

I can't believe all the replies filled with good advice. We'll be pulling all our options together and I'm not about to give it all up if we don't have to. For me it's a question of, if we have to work 2 jobs each, cut out all spending, downgrade everything just to keep the house, how worth it will it be? Will rates stay high for a long time?

Thanks again, will reply more when I've finished putting baby to bed!

See if you can watch the Martin Lewis show on Catch Up - it was on ITV earlier this week. One of the messages on that was the forecast that while rates still have a small way to rise, they will start falling in about a year.

No guarantees of course. But don't rush to sell your home when it may well be that we are almost at the top of the upward curve of mortgage rates.

Def don't sell. Will cost more in fees

You say childcare will take up all your salary - can you not go back and do an evening /weekend or even nights as a card for example so no childcare costs

Or go back earlier - to keep career up if in a good job and do extra overtime or second job

Interest only for 6mths

Don't you have to pay income tax on the rental income though? We decided not to buy a 2nd property to rent out for this reason.

My 4 month old is sleep regressing hard right now, it's not going to be a fun night 😂

@Blondeshavemorefun I exaggerated really. childcare is more likely to take up over half my salary. We're going to do some maths to see if that can make up a portion of the shortfall. With the rest, it might be a case of a 2nd job for me or him. With my son already enrolled at nursery for Feb, I'm happy to keep that as my start date for work.

Selling our last house and buying this one absolutely bollocked us short-term, financially, due to stamp duty and fees, so I totally get why it wouldn't be the ideal scenario. That's why I wouldn't consider downsizing and buying again immediately. We have about 5k stashed away which can cover part of any potential moves but I do see your point.

I think me and husband have to sit down and do some serious maths to work out whether it's really possible, or worth it, to stay. I adore this house and never planned on leaving in just 2 years. You are all making me realise there are more than just the 2 options I stated at the beginning.

Post natal depression has a habit of making me see the doom in everything, so I do need to get all the facts in front of me.

Tbh, I wouldn't just blame baby blues. The whole situation with our economy is making a lot of people miserable, down and pessimistic.

It sounds like you have been given some good ideas and I am sure you will find a way to keep it.

Maybe you both get extra jobs. He works in a restaurant Friday night, you Saturday.

My sister is a crazy person who in her late teens both her and her OH worked every single weekend for two years to save up for her dream wedding.

Exhausting. But she had that 20/30k wedding, back in 1996.

@rosemarycait96 make sure you get any financial childcare help you are entitled to too

I agree totally with this.

Don’t think too badly about going Interest Only if you have to for a while, just viewi it as renting with the ability to treat it as though you own it.

This isn't true we fixed for 10years on £115k at 2.9% but it would be way higher, now. Almost double.

It is true I’ve got the paperwork through its buttons difference.

Just double checked. £27 a month the new rate is adding to the monthly payment

no they aren’t, most mortgage brokers are mortgage brokers hence their job. It is two different sets of qualifications and to different FCA registrations . Even if they have their level 4 (or equivalent) if they are working as a mortgage advisor and not a financial advisor then they can’t provide financial advice

Good points, the time to sell isnt when people are struggling to get mortgages! Wouldnt it be better to take in lodgers and try to hang onto the house?

The best financial advice I think is to always DYOR

What is DYOR? Does it mean do your own research?

Still struggling with that faulty keyboard, DeadHouseBounce?

not sure how that would work in terms of actual financial advise ie what investment to take/ pension transfers etc most people don’t have that level of expertise

theres a reason the qualifications exist after all

Every possible thing a financial advisor could tell you is available to research online or in a book somewhere, people just need to make the effort. I am not saying dont go to a FA, just dont follow their advice blindly, do some research on why they have told you that that particular fund from this particular company is suitable for you (are they on some sort of commission maybe?)

Yes.

To an extent but I don’t think most people would be able to appreciate the complexity of a management wrapper what that means , how it can affect investment split, diversification of asset class and geographic location of said asset class. Maybe you could find previous fund performance, maybe (and I’m not convinced you can for all funds/ investment types)
understnad what medium risk means, sure, understand the type of fund they’re recommending yeah fantastic but given the generally low level of financial literacy in the UK i think the complexity might be too much for a lot of people.
of course they are going to get some sort of commission or performance related pay, but ultimately it is a regulated role so they aren’t used car salesmen and if they are an IFA they tend to have whole of market coverage. Now if you saw a hsbc financial advisor surely you go into it knowing that they have a more limited variation to offer

If possible I’d stay put until 2025 when your credit record clears and then hopefully you’ll be able to get a better deal.

you could look for a lodger short term in order to help with the mortgage.

Probably true, tell most people that the "10 Year Yield" runs their mortgage rate and they look at you funny, quite scary really.

Exactly! The majority people that think it’s the base rate (exclusively) that’s driven up their mortgage not understanding it’s Largely government borrowing and inflation.

Easier to blame Truss for everything than to think too deeply about the reality of the financial system.