How is everyone coping with mortgage rates increasing?!

[Undecided94]

This might be a thread for the money matters section but hopefully, it makes equal sense here.

Early 30s and looking to buy a house with land. The idea is that we will have more space for a home gym, home office and somewhere to keep my horse. I have found a house, it’s been on the market for 5 months with no offers so I’m tempted to make a cheeky offer.

That said, even if they accept the offer, mortgage would be around £2k per month! Add bills on top and it’s feeling scary. Is this normal? Our friends seem to have borrowed much more and earn much less but their interest rates are half! I’m looking at over 5%.

There is a cost either way, if we stay where we are, I continue to pay the monthly fees, which are less than the jump to the house with land but I’d have the convenience of having my horse on my own land.

The cost of living seems to have just shot up. It’s not just the mortgage rates. It’s absolutely everything! How are we all coping? Honest opinions welcome 😊

Borrowing rates are not likely to be that cheap in future though, so today"s "standard" becomes tomorrow"s "Can"t afford it", the standard going forward is likely to be house prices falling?

I was wondering how you were getting to £2K a month on a £300K mortgage.

Is there a reason you don't take it out over 25 years, or even 30 years ? If you are going to start trying for a family in the future, then you must be young enough for lenders to lend over a longer term. You can then overpay every month, or year, if you want to aim for paying it off after 20 years, but aren't actually committed to the higher payments during any lean spell.

However, I agree with the pp poster saying this is a 'my diamond shoes are too tight' scenario.
You have a 40% deposit.
You are young and can pay over a longer term.
You have your own horse.
You are buying a large property with land included.
You have money saved for maternity costs.
You have other investments 'to fall back on'.
You are worried about a £2K mortgage payment on a £6k monthly income ???

"You are worried about a £2K mortgage payment on a £6k monthly income ???"

Smart money doesn"t throw away money on debt interest payments, what happens if there is a property price crash and the house loses a lot of value, you still pay interest on the original debt. The fact that monthly mortgage debt costs are just so ridiculous now means we are close to a tipping point IMO.

I’m about to exchange and committing to £1788. This was before everything went crazy so I have a 4.82%. It stings because we’ve been on a 1.51% on our current cheaper house so basically tripling our mortgage (although income has increased a lot since we bought this place).

I’ve been scared by it and I’ve been at peace with it and ultimately it is what it is. We want, and will ultimately need once this baby is moving around, more space and quite frankly if we bought a cheaper house now at 6% the mortgage repayments will be almost what they are in this bigger house.

I do worry about what will happen in 5 years time but I have stress tested up to 8% factoring in inflation based pay increases and the general projection is they will come down again in 18 months or so (although only back to around 4.5%). Ultimately everything is a risk isn’t it? Anything could happen in the next 5 years - I’m going to try and overpay at least £50/month to knock a bit off the capital and also start using the sprive app. Well also have a drive way for 4 cars in the new house so I’ll be able to rent out parking ad hoc and we also have the option to rent out storage if things get really dire.

On paper we will be okay. You never really know until you are living it? The alternative is staying here and not having the quality of life we want in other ways.

My daughter is going to have to sell her house as she won't be abe to afford to re mortgage in the spring. She bought with a boyfriend who turned out to be an abusive dickhead, kicked him out and has been struggling along ever since. But I think this will finish her, unless we put our savings into brining her mortgage down. But our jobs are vulnerable to AI and we would only get that money back if she sold, so I reluctant to do that. But I don't know how easily she will sell it so I suppose we will have to look at all the options.

I would buy the house, OP, livery bills are sky high and there are too many compromises being made on most yards that impact a horse's welfare and/or your mental health. We have our own place and our ponies live out 24/7, will bugger all poo picking as we rest and rotate. Electric rope fencing on the wooden fencing keeps maintenance to a minimum and field maintenance tends to be seasonable. I find the more land you have, the easier day to day life is. Our ponies are much happier than they were on livery and I am keeping for less than it cost me to keep one on part livery.

I agree, can't think where you could get land for that price

'Value' is only relevant when you are buying or selling though.
Someone telling me my house is only 'worth' £X now, and it was 'worth' £Y 2 years ago isn't relevant unless I were selling it.
Plus, if you are selling and buying, then the property you are buying will also have crashed. I've been there, done that, and got the t-shirt.
The OP has a 40% deposit so it is pretty unlikely she'll go into negative equity in any realistic forecast.
She also has the 'comfort blanket' of her investments.

wrong quote, sorry!

I guess that could be true of anything (liveries giving up horses etc.) but the really good quality dog walking field in my area charges a premium and is booked up months in advance. I suppose that demand might reduce but I wouldn't have thought it would go away. For some people that's the only place they can safely walk a dog off lead and probably something they would continue to prioritise. Not saying it should be a driving force in the decision but maybe something to consider as a relatively passive 2nd income

I don't think so. People are crazy about their dogs. People default on their mortgages before they stop getting stuff their dog.

Bottom line is everyone has to live somewhere. So you can leave a rented property and move back with mum and dad. Great. Don’t mind me and the girlfriend / boyfriend mum, we’ll be upstairs. Here’s some earplugs. Been there for about a year in my early 20’s. Never again.

The average person doesn’t have grands spare a month to invest. The average rent per month is £1400 or so, so your suggestion is that people should save at least that ontop of paying their food, utilities and so on? How many people are there bringing in £4-5k a month after tax? Or do they live in a bedsit for 40 years to then buy a house in their 70’s? Joy.

There are negatives and positives to both positions. I am yet to read anything that makes me think retired me is going to regret having 20-30 odd years based on average life expectancy with no rent or mortgage to pay. There is no way current me wants to sell up and live in a bedsit to build an investment pot. If people do choose to do that then all power to them.

The problem with trying to make moeny from your land is you need insurance to cover the people using it and that can be eyewateringly expensive. No matter how mad people are about their dogs, there is a ceiling as to how much they will pay for a secure field. A local cross country course closed down recently, because the insurance premiums were wiping out their profits.

Totally agree with this - it’s important to be sensible but life is also for living. It’s like those people who proudly tell you they haven’t had a holiday for 15 years and get all their food yellow sticker but it’s okay because they’ll have paid off their mortgage 10 years early. There’s a balance, you can’t wait until you’re totally financially secure for life to start.

I have a large deposit so it brings the cost down substantially and the house needs renovating.

Luckily we bought our house when rates were good and we maxed the term as long as we could. The repayments were only 20% of our income and we overpayed by a substantial amount. When we remortgaged a few months ago we'd managed to knock a lot off and our income has doubled since we bought. Our mortgage went up by £150 a month, which was annoying but manageable. I have friends who bought on good salaries and they really stretched themselves on the mortgage to get the best house possible. Now they have 2DCs in nursery and one of them isn't earning as much. They are very worried right now.

I’m up for remortgage in February.

I was considering taking 25% allowances out of my pension, plus some savings & paying it off. Technically I have 7 years to go and I’m looking at a huge jump in interest.

ive run all the numbers through AI and if I do this and then put my “mortgage payments” into my pension it’s a no brainer that will save me many thousands over the next 10 years.