SLLM (Single Lady Large Mortgage)

Sistergold

@Sandyra
In May I am not going to try and remortgage with another lender at all. I am planning to just switch products with the WestBrom. The mortgage size causes too much stress to meet affordability requirements and I am not going to worry about losing a bit in interest if it means not worrying about the paperwork. As long as what they give me is lower than their SVR then I don’t mind it being a bit over other lower rates. The main way I want to save is through OPs and shaving off years from the mortgage term. I can not face the stress of another full application again. So I am going to be with the WestBrom for the life of my mortgage unless their rates become like double everyone else’s rates then I will buckle up and move. 

Sandyra

Yes, if that they offer what you need, then fair enough. The paperwork can be very stressful.

Sistergold

@HelloB
Those are truly some super low rates! 1.14% and 1.09% wow! I hope these lower rates will hold till next year. My product ends end of May so I can mortgage switch from February/March well from 4 months before. So fingers crossed I will be able to find a good product within the same bank. 

Sistergold

Sandyra said:

Yes, if that they offer what you need, then fair enough. The paperwork can be very stressful.

At this point its more like taking what I am offered just to avoid the stress for a while unless the difference is too much. “I want to see if I can just chew for a while what I bit”.

HelloB

@Sandyra Paperwork is stressful, right?Plus every time we switch lenders/products, there are legal fees, valuation fees and a min £999 product fee. 

@Sistergold I believe we will be in a bear market/recession for some time due to Covid 19 and Brexit. Especially if the furlough scheme runs out in Oct 2020 and potential for mass redundancies (think BA/Easyjet approach, but across all industries). I'd like to think most people have an emergency fund to last a few months. Proof in the pudding would be how many properties are repossessed early next year, as people cannot meet their mortgage responsibilities. So the low rates should hold until early next year. I'm by no means an expert (in anything!), but Bank of England has no more room to assist the economy. BoE interest rate is already at a historic low of 0.1%, unless they follow the Japanese model of negative interest rate (to encourage spending instead of saving to stimulate the economy - but doesn't work in practice). 

My 5 year fixed is locked in at 1.68% in Jan 2020. At the time I couldn't believe my luck in securing such a low rate. I chose 5 years because I didn't like the thought of paying £1k every couple of years to switch mortgage products. But the early repayment charge is pretty steep if one goes over the 10% overpayment threshold. In hindsight, I should have gone with a tracker mortgage with no overpayment limits.

Sistergold

Hello @HelloB
You got such a good deal there @1.68% fixed for 5yrs! Last year May Santander had offered me 1.74% fixed for 2yrs meaning £2101 per month and WestBrom offered me 1.99% variable for 2yrs meaning £2202 per month. I took the WestBrom one although higher rate for several reasons. It meant £100 more in payments at the time but as it’s variable now I am paying £2098 which is £100 less than at start and bring it to same payment as the fixed better rate I would have gotten with Santander. My interest rate is now down to 1.49% from 1.99%.

The honest truth is most people once we get a mortgage we are so lazy or scared we even stay with the same bank after product reverts to SVR. I am one such person. I only knew after divorce when I was buying this lone property that there was such a practice called product switching to cut down on interest! 🙀 I have always known about remortgaging to another bank. So in all my previous mortgages with Mr Ex I paid on SVR forever as I could not be bothered to do fresh applications! 😼
I also anticipated that because I borrowed a lot this time there can be a change in affordability criteria such that there was a chance I could be stuck in one bank(mortgage prisoner). With  being single and borrowing a lot the stress of the process was soooo much I decided I don’t mind paying the SVR if need be but I committed to making sure that whatever the case I will OP as much as I can. I just feel moving banks every 2 or so years will take too much effort and I have to keep up with the fact that even if it’s cheaper rate I have to factor in the fees like you said to check if it’s truly cheaper? To be honest I just committed to staying with the same bank. 

I am also of the same thoughts that one way or another we are heading for tough times ahead. I am also praying that all of us single ladies and everyone else somehow God will just keep us in our jobs so that we can at least keep up with our mortgage repayments! For us single ladies not losing are jobs is more critical as there is no one else to fall back on. Fate favours the prepared so yes a higher than normal emergency fund needs to be in place. The economy has had a back to back hit with the uncertainties of Brexit and now COVID-19. Only God knows where this will end?! 

So at remortgage time I think the banks would have tightened their lending criteria? Imagine trying to move lenders post Covid for a single mom borrowing over £400k with 4 children? When I got the mortgage I did budget for the chance that I might need to pay the SVR. What makes paying the SVR not feel so bad is the amount I would have been paying in rent if I did not have a mortgage. 

One thing I have always done with mortgages is that I always get a tracker or variable rate product. I love the idea of being able to OP any amounts and also I like the idea of reaping the benefits of rates going down. I know rates can also go up but I don’t mind that too it’s just taking a chance I guess. 

I am not very risk averse so when I was trying to get a mortgage I was prepared to even borrow from the not so favourable lenders(meaning much higher rates) if that was the only way I was going to get a mortgage. Luckily it never came to that and WestBrom is not so bad. 

HelloB

@Sistergold I hear you about not wanting to move lenders. 1.99% for a higher LTV/borrowing is reasonable. I would have been happy with that, just so I don't have to worry about overpaying.  And your foresight of taking a tracker mortgage is a stroke of genius.  

On the point of lenders tightening their criteria, I was able to borrow up to 6x annual gross income dependent on the lender via an IFA.  Gone are the days of self certification for mortgages! I suspect the affordability criteria won't drastically change if one uses an IFA, but LTV is probably a more important factor.  If property prices do drop due to forced repossessions, our existing LTV will increase or even be in negative equity, if we made zero overpayments.  Which means less favourable mortgage products available. So overpaying will decrease the amount needed to borrow later for (affordability), secondly to offset the anticipated market adjustment in property value (LTV).

Completely agree with you on being on one income and the risk of losing jobs, with have no-one else to depend upon. Prior to this year, I was in a two income household. Never had to watch the pennies. While I'd watch Martin Lewis on TV for entertainment, I never thought to sign up and engage in the forums within the MSE website until now.  So I join you in sending positive energy to all single ladies with large mortgages.  I hope we will all be secure in our employment/stream of income.  For those who have additional responsibilities (children and elderly parents to look after), I hope we will all be able to cope and thrive knowing we are not alone on this journey.

Sistergold

@HelloB
6x income wow that’s truly impressive! Gives all of us hope indeed! IFA make the whole process manageable! 

Xx

HelloB

"Fate favours the prepared so yes a higher than normal emergency fund needs to be in place."
I pondered on this and wondered what everyone is now aiming for in emergency funds? Previously I thought 3 months of essential (mortgage, bills & food), but now should we increase that to 6 months? 12 months?  Has anyone purchased income protection insurance?

How would we build up the emergency fund while wanting to overpay on the mortgage? Once overpayment to the mortgage is made, it cannot be released easily.  Payment holidays can be requested, but it hurts credit history for 6 years due to missed payments. So would the strategy be 50% overpay mortgage and 50% increase savings for emergency fund?

Sandyra

Morning
SG - no it makes sense to stick with WestBrom, potentially difficult times ahead and lenders could be stricter. HB your deal is great! Perhaps next year I'll move onto a fixed, it was purely coincidence that being on a tracker is now favourable, I opted for it because I thought I may move and didn't want to pay the ridiculous ERCs. 6 x income!!! Wow, I thought I was lucky with 5. Yeah paperwork, fees, etc, when I first started, I left my mortgage deal with Barclays 8 months in, that was an expense but worth it in the long run.

My thought process was to focus my OPs to match my monthly interest so that my balance would actively be decreasing, then my rate dropped twice so I have planned to keep my OPs at the same planned rate + difference in interest change. As for the EF I'm working on £1250, which is now for me a lot easier than I thought with less money being spent, for the unforseeable future or least til the end of the year. This is what I could live on monthly if required. I've not opted for insurance as my job is in Education so pretty secure.

When I was with Nationwide, they put your OPs in a reserve, so that if you decided you needed it, you could get it back, not sure if other lenders do this. If I feel its becoming to tight, I'll reduce my OPs.