What happens if we lose our income?

[nchristie]

I had a housing scare in 2008/9 when the economic crash happened. At the time I was in my early 20s and subletting, unemployed and not entitled to housing benefit because I wasn't on the contract where I lived and I couldn't move in with family. I had some savings which were running down really fast. I was lucky and managed to move in with friends who put me on the contract so I could have an address and claim benefits, and very soon after I got a job, but I had a terrifying couple of months where I genuinely thought I was going to spend all my savings on rent and end up homeless. Fast forward to now and I'm 41, I've got a 3-year-old in nursery full time. I'm a high earner, and me and my partner own our flat with a mortgage which comes to about £1000 a month. Things are precarious in both our jobs right now, and the jobs market is terrible - I'm hearing there are hundreds of applicants for each role I'm going for. I'm the main earner at home, if I lose my job our household income will drop from £110k to £40k (before tax). Because of my earlier housing scare I'm really on edge now, and a big part of it is the fear of the unknown. What happens if we stop being able to afford the mortgage? How much time will we have before we lose our home? If we both end up without salaries at the same time what will things look like? How bad does it have to get before we can access support from the state?

What happens?

Speak to your mortgage provider.

@MyMachine is now the right time to talk to them? I'd have thought it would be better not to raise the topic of income drop unless I have to.

You save 6 months worth of bills. Mortgage lenders aren’t keen to foreclose and will try to work with their clients, so stay in touch with them if you run into trouble. Basically, future proof your life as much as possible.

Have you lost your job?

Mortgage payment protection insurance?

Wouldn't you be entitled to a
decent redundancy package?

No, the sooner the better.

So how much have you saved over the years? What are your outgoings like and can you trim all the excess luxuries to start overpaying your mortgage?

Instead of freaking yourself out with rumours, sit down with your partner & work out s budget. Have a practical plan in place if your income drops to £40k, which many people survive on by the way.

While you're applying for new jobs, can you do some consultancy work or freelance contracts to boost income?

C'mon OP, you're 41 @nchristie.

You know that life is slightly uncertain.

You'll be fine.

Or not!

Any time you need help with your mortgage contact your company . It is so important as once you are seen to be engaging with them , making arrangements , sticking to payment plan, you will be OK . It is people who default and ignore that end up in trouble. Often you can agree maybe a period like 6 months interest only .

If / when either of you lose your job you need to immediately sign onto non-means tested JSA. It’s only £80 a week or so but at least it’s something. They can also reimburse the cost of travel to interviews and an interview outfit.

You’d also need to run 2 job hunts - one as a career hunt, and another as a part time role in a supermarket or similar with scope to increase your hours. Ultimately you might not be able to pay your mortgage in full but if you have something coming in it’ll help.
You can get mortgage breaks, visit Martin Lewis who has info on this and how it actually works.

With some mortgages, overpaying entitles you to a break from payments further down the line if it's required. Something to consider whilst you're earning well.

You (hopefully) have some savings set aside to cover costs while you try to find new roles. You pick up bar work, waitressing, delivery driver work if at all possible to immediately bring some money in while you look (although there's competition for those jobs now).

My crisis plan is to rent out our spare room, but obviously we're lucky to have the option.

And my CRISIS crisis plan, is to get on Only Fans!

Have you got mortgage payment protection insurance? If not get it now, before there is any serious talk of you losing your job.

What sector are you in? Yes the jobs market is hard but you should be able to get something. Even a few temp contracts.

1000 mortgage is not too bad and couples on a LOT less than that pay similar amounts. I assume you have other fixed outgoings though. At least you wouldn’t need childcare if unemployed.

Use your anxiety to review finances and save every penny while you can.

I have Mortgage Payment protection insurance. After covid it became really difficult to find it though, understandably.
We had to claim in 2009 when DH lost his job after his company went under, it was so worth the £30pm we pay for it.

Surely with a mortgage of £1000 and an income of 110K you have some savings?
Many people manage a £1000 mortgage / rent on a 40K income . As a pp said you just get any job to tied you over whilst looking.
So although it won’t be the income you’re used to as long as DH doesn’t lose his job too, I think you’ll be fine.

This has literally just happened to us - Dh has become very unwell and lost his job. Our mortgage insurance kicked in for 3 months and we're surviving on my min wage term time job and a tiny bit of UC! It sucks!
On the bright side, I was always a bit cautious and didn't make my mortgage too big by borrowing for home improvements, so it's less than rent would be.
But there is very little help out there if you have a mortgage so my advice is to save everything you possibly can and get that mortgage down asap.

@Nearlyadoctor Up until recently I always put my savings into overpaying the mortgage, which is why the mortgage isn't too high. I do have some savings too, but not a huge amount.

No, I haven't. But people keep being fired in my company so I'm anxious.

You have both done very well indeed with the jobs, child and buying a property. At times we had a second job at weekends or second source of income which I did feel offered us some additional protection.
If I were you at 41 with a 3 year old I would have a 2nd child but not take a maternity leave actually but them I am a risk taker who works for myself and have 5 children.

If you can, you save up the equivalent of six months bills and you hide in an isa and NEVER touch it, so it is there for this situation. I was made redundant during COVID and it took 7 months to find another role. I'm a single mum so my income dropped to zero.

Now, before anything happens, you both work on your cvs, start looking for new jobs now. If either of you is made redundant, you consider anything that will keep some money rolling in while you search for a permanent role. Delivery driver, bar work, warehouse temping

And you cancel all discretionary spending.

You let your mortgage co. know if it happens. You look at going onto interest only for a few months.

You will cope. Good luck.

Assuming only you loose your job then the mortgage is 12K out of the 40K leaving 28K to live on - it will take adjustments to lifestyle but is more than doable until you find something else.

@nchristie hopefully therefore if you desperately needed to you could take a mortgage payment holiday. Not something I’m sure you’d want to do but would get you out of a sticky spot in the short term.
🤞 you’re job is ok but try not to worry which I know is easier said than done .