How are people actually coping with mortgage payments increasing?

Sistergold

Ballymoney said:

Genuine question…How many people who are going to really struggle with the higher interest rates actually paid attention to the “If interest rates hit 6% your repayments would be £xxxx per month” line in their mortgage offers on their current low % fixes?

Did you read it and automatically assume those rates will never actually happen? 

I’ll hold my hands up and say that I paid next to zero notice of the warning of higher rates but I’m intrigued to know other peoples experiences.

I am also guilty of this. Read that it could increase to x% will you manage? Your mortgage will be at risk in my head it was blah blah blah. Now it’s all real! One thing I did do though is start overpaying to start reducing from the £487k mortgage I got one year into the mortgage. This was 2019, I must say it’s biting hard now the rate rises as I always take a tracker mortgage. My mortgage is a discounted tracker ending May 2023 at which point I will not fix at whatever high rate will be going. I will take another discounted tracker and see how things go. Mortgage is a long term commitment and can not afford to panic into a high fixed rate. Generally overpay by a £1000 a month  although I reduce some months due to projects, so the rate rise have still not gone over my original monthly quote as it has been going down due to overpayments. I am still feeling the pinch though I must say. 

Times are really hard and getting harder. We all need some luck. 

MFWannabe

Martisha said:

MFWannabe said:

Martisha said:

Applied last week for 5 years fixed at 5.39% now I am reading news that rates are going down next week

I think if you only applied last week you can cancel the application? If you want to? 

Not sure interest rates will come down but personally I wouldn’t fix for 5 years at an interest rate above 5% but it all depends on personal circumstances, amount owing and ltv etc, also the standard variable rate or tracker mortgage you could get 

We are porting £96k at 1.69% until June 2024 and borrowing £220k at 5.39% with Nationwide.
Ltv is 83%

This was the cheapest option last Friday.
Broker did not advise to wait, now I am questioning myself weather we should delay the application.

I guess you’re moving house then? 

Are there any 2 year options available? 

Personally I’d feel more comfortable fixing for 2 than 5 but this is my personal opinion 
I’m no expert 
there is a Ask a mortgage advisor thread on this forum; you could ask on there? 

Nailer99

It’s a good question. For us, the increase in payments is approximately the same as our current nursery bills, which will end soon after the new mortgage kicks in.  

So we will cope, but will be stuck in our cash-strapped “nursery budget” forever, it seems.

Even in this privileged position it’s a bit of a kick in the teeth to be honest.  

BikingBud

brownbagsFTB said:

If people really understood total amount repaid and how much more it costs to pay a mortgage off over 35 years v 25 years then the situation may have been different.

For too many it is too late, they have sold their soul.

I think most people do understand. I was well aware of the interest on my 30 year mortgage but as I didn’t manage to save enough to buy alone until I was 39, if not then… when? Getting on the housing ladder is seen as critical for most people my age. We want assets by the time we retire and to not have to be beholden to landlords and pay a good proportion of what will likely be a very meagre pension in rent. Many people I know survived the 2008 housing crash and we will survive this. It’s better to be a homeowner (even if it it does involve a few years of struggle out of a 30 year term) than it is to be renting forever. People always have the option of overpayment when rates are low. 

And maybe that's the real issue, you consider getting on the housing ladder and getting assets to be the priory rather than just getting somewhere to live.

bamgbost

the increased payments will defo be a stretch. But no choice.
Ours will rise by £500+ a month at this rate.

Just hope it will be an easy process to extend the mortgage term or interest only for a short while could be an option?

brownbagsFTB

@BikingBud well yes for reasons I just specified. I want to be mortgage and rent free in my retirement. I’ve been renting since I was 18, why should I continue when I have the means to buy now? The rise in interest will be painful but affordable for me so it was a no brainer to buy and I will weather the storm 

boxer234

BikingBud said:

brownbagsFTB said:

If people really understood total amount repaid and how much more it costs to pay a mortgage off over 35 years v 25 years then the situation may have been different.

For too many it is too late, they have sold their soul.

I think most people do understand. I was well aware of the interest on my 30 year mortgage but as I didn’t manage to save enough to buy alone until I was 39, if not then… when? Getting on the housing ladder is seen as critical for most people my age. We want assets by the time we retire and to not have to be beholden to landlords and pay a good proportion of what will likely be a very meagre pension in rent. Many people I know survived the 2008 housing crash and we will survive this. It’s better to be a homeowner (even if it it does involve a few years of struggle out of a 30 year term) than it is to be renting forever. People always have the option of overpayment when rates are low. 

And maybe that's the real issue, you consider getting on the housing ladder and getting assets to be the priory rather than just getting somewhere to live.

Where else do you propose people live ? Private rent ? The demand currently outstrips supply so renting isn’t that easy.  I had a choice buy or rent at £300 more a month for a similar property.  I have two dogs so renting is even harder.  It’s not about selling your soul but trying to get some stability.  

isadreamalie

I'm lucky in that I've reduced my debt from 230k to 123k in my initial five year fixed when I was paying 1.99%
My new five year fixed is 2.59% and kicks in from early November raising my monthly payments by about £40. I'm really glad now I overpaid and sorted my new fix early back in June.  I haven't been overpaying as much this year though because I overdid it back in around March and I got to the crazy position of having to move money from my ISA into my current account to avoid an overdraft.  Since June I've not been able to overpay whilst my new fixed mortgage is set up... I should be able to again from November. Still on track to pay it off/ minimise monthly payments in five years.

[Deleted User]

BikingBud said:

brownbagsFTB said:

If people really understood total amount repaid and how much more it costs to pay a mortgage off over 35 years v 25 years then the situation may have been different.

For too many it is too late, they have sold their soul.

I think most people do understand. I was well aware of the interest on my 30 year mortgage but as I didn’t manage to save enough to buy alone until I was 39, if not then… when? Getting on the housing ladder is seen as critical for most people my age. We want assets by the time we retire and to not have to be beholden to landlords and pay a good proportion of what will likely be a very meagre pension in rent. Many people I know survived the 2008 housing crash and we will survive this. It’s better to be a homeowner (even if it it does involve a few years of struggle out of a 30 year term) than it is to be renting forever. People always have the option of overpayment when rates are low. 

And maybe that's the real issue, you consider getting on the housing ladder and getting assets to be the priory rather than just getting somewhere to live.

What exactly do you habe against someone living in a home AND also viewing it an asset.

Bonniepurple

We are fixed until the end of September 2026.  At the point that interest rates were at when we took it out, our repayments would jump by about £200 a month if we did nothing.  Am I worried?  No.  Our finances will be completely different in 4 years.  Yes, depending on what happens, our payments are likely to go up.  There’s a lot of ways that we can earn more/cut back.  At the moment I don’t want or need to and, after some difficult times in the past, I want to enjoy life for a bit.

I feel really sorry for people who bought with the Stamp Duty holiday and are now coming up to remortgaging.