How are people actually coping with mortgage payments increasing?

mi-key

I am glad my current deal was running out in March this year, managed to get a new deal with the same lender at 2% for a 10 year fix ( which should take me to the end of the mortgage fingers crossed ) 

Saint84

That’s great timing to be 2% for ten years Sometimes it just down to luck. People wanting to fix now will have to pay c5% which is a material increase. 

Martisha

Is it best to go for 30 or 32 years mortgage?

BikingBud

Martisha said:

Is it best to go for 30 or 32 years mortgage?

£250K @ 3.5% over:
30 yrs - £1123 per month and total payable £404,301
32 yrs - £1084 and £416,105

£150k @3.5%:
30 yrs - £674 per month and total payable £242,579
32 yrs - £650 and £249,665

Very little difference in 2 years however:

£150k @3.5%

20 yrs - £870 per month and £208,844

Depends entirely upon your values and intent.

MERFE

It's impossible to say how we are going to cope until we actually remortgage, not due till next december and £6500 erc so not worth doing it too early. We have been merrily going along saving a reasonable amount each month hoping at the end of our 5 year fix we could pay off a help to buy loan with about half savings and half added to the mortgage. Now we are more likely to keep the help to buy loan. A bit of a worry though as with the increase in monthly repayments we will not be able to keep saving like we have been so no idea how we will ever pay it off now. Our mortgage is not huge though, £128000 currently and we've been saving around £600 a month, it probably just means we can't save anymore once we remortgage.

PK_London

I grew up poor and my parents struggled in the 90s with their mortgage and it left a lasting impression on me. I fixed at a low rate a few months ago so I should be able to ride out the storm. I however deliberately borrowed a lot less than I could and had a large deposit. No part of me thought low rates would last forever or there would not be economic storms on the horizon. Plus as my mortgage is 1/4 of my monthly take home pay the idea was to crazy overpay to have it cleared within the next 5-10yrs. Im one of the lucky ones with a low rate.

If I was to buy at 6% my payments would go up 50% - ouch. If they were to go up to 10% - that would increase my payments by 133% or a jump from £750 to £1750 a month. I could still service that with my take home pay. I could also take in a lodger.

Right now, my spare room would rent for more than my entire mortgage because as insane as property prices and mortgages are, rents are super high too. Going from £750 a month to £1750 a month would hurt but I don't see it happening (although I wont be willing to bet on it).

On the other hand, I know of a few people who took advantage of the stamp duty holiday to buy their London homes. A particular family member and wife. They saved  £25k on stamp duty to buy their £550k London home, with 10% £55K deposit at 2% on a 2y rate. Their £1,880 mortgage is set to leap to £3,032 a month at 6.2%. They were already stretched at 2.2%. At 10% their payments would rise from £1880/m to £4344/m. Absolutely impossible to service given they have two kids and child care costs. Quite frankly they will be soon forced to sell and move back in with elderly parents. 

fletcher1985

my mortgage is 82k my two year fixed ended 1st October 1.74% £370 per month with santander and lucky i was able to fix in a new deal with them 6 months early which my mortgage advise said was the best deal around at 2.79% for 5 years now my payment is £413 per month. i think of my self being very lucky compared to some people come to the end of there fixes soon or even next year. hopefully i will not overpay the mortage but take out a fixed savings soon to pay in to that.

adamL

I'm currently fixed on 1.2% £1950pcm until October 2023. 20 years left to run. Looking at the numbers now is awful. All discretionary UK spending will cease at the point our mortgage goes up to at least £2800 in October next year. And all I can hope for is that between my wife and I, we get a good inflation based pay rises and 1 overtime day a month to cover the extra costs. The situation however is dire. What I refuse to do however is fix at anything above about 4.5% because in my opinion it's unsustainable.

AliceBanned

My 3.09% fix ends in March 2023. I have £11k in credit cards at 0% and broker said I would have to add to current mortgage when I remortgage. Didn’t like this (£179k mortgage on my own). Got second opinion and have locked in a new fix to start from March at £5.9%. It’s high and costing £280 more pm more but I have a spare room if I decide to get a lodger but can afford the extra. 

I had planned to borrow more next year to move to a house as I’m in flat no garden. But put that on hold until maybe early 2024. Going to throw what I can at mortgage in overpayments but probably will get a lodger soon so I can still spend and save. 

I’m glad I moved when I did a year ago as I was in a one-bed flat. Couldn’t have got mortgage for two bed in this climate - probably not.

tony3619

My fixed rate of 1.69% ends in May. I've decided to save £300 a month between now and then which should cover the extra payments upto about 8.39% (hopefully fixed rates dont go that high) 

I worked out after the ERC and the current rate of 5.6% the repayments work out roughly the same so would rather take the risk they are below 8.39 by the time I can fix in a new deal (January being the earliest) and if they aren't I've cover a big percentage of the increase.