Will I lose my home?

enthusiasticsaver

A positive is that you are looking at it now so you have time to adjust if needed.  I would get rid of the credit cards you have just done a debt consolidation loan for.  That usually is a sure fire way to end up with more debt as often people do not rein in spending but carry on as if they can continue to build up debt again. Worst case scenario is a DMP for the unsecured debt.  Prioritise your mortgage and rent. 

kimwp

AdmittingDefeat said:

Altior said:

MFWannabe said:

AdmittingDefeat said:

fatbelly said:

MFWannabe said:

OP have you put the figures into a mortgage calculator to see what it will go up to next year based on 5% or above? So you have some idea of what payments you’ll be looking at?  

If your mortgage deal is ending in June 2024, it's worth looking at remortgaging options in Dec 2023. This is because you can lock in a new rate and switch when your current deal ends, avoiding an ERC.

If you're looking at a 5-year fix, you should probably budget for 5.5% - if you can do better then that's good

At 5.5% it would be an extra £136 a month, but 5.5% seems low after everything I’ve seen in the news etc? 

That’s about the rate for current deals at the moment 
have you checked what rates your current lender is offering? I know you’re still fixed but it will give you some idea 

Shared ownership will usually be above the typical headline market best rates.

I believe an overarching strategy to complete staircasing is quite important for the OP. Working around the rate increase next year should be doable. This is from my own experience as my rent portion was pegged to RPI. 

Just had a little nosy- current provider is offering 7.3% for shared ownership mortgages at the minute- which obviously will go up by December which is the earliest we can get a fix in. 

So my plan is; 
- make swaps on life insurance and breakdown cover
- overpay whatever possible now on the car loan to get that paid off ASAP (I am due a small pay rise later in the year which should be approx an extra £80 a month) 
- any other spare money to keep going in emergency fund to cover cost increases
- switch in December before any potential rises next year
- DMP if situation is no better by the time mortgage increases 

Sounds great. I would also look at whether a water meter would reduce your water bill and do a plan of your overpayments to your debt so you can see when you will have finished paying it off. Then you can see if it's worth paying some of your partner's commission towards the debts to reduce the interest you pay.

If your jobs are secure, it may be better to pay off your loan rather than save into an emergency fund - as you can use available credit should an emergency occur and debt costs more than savings earn.

enthusiasticsaver

I would use the next year to really  drive down spending and moniter whether the soa is accurate.  Getting rid of the car loan sounds doable and gives you more leeway in your budget but I also think you need an emergency savings account especially if you are closing down credit cards. It is imperative you do not build up more debt.  Which loan was the debt consolidation one?  The bigger or smaller one? 

When it comes to it remember the mortgage is the priority not the loans. 

AdmittingDefeat

Update: AA now cancelled (though they still took the payment- waiting for refund!!!) and have gone with a much cheaper alternative. Water was high due to them undercharging us for months when we first moved in- this has now gone down to £42. Revisited the mortgage paperwork and it ends this October, not April! So will not have time by then to pay car loan off unfortunately. We have a bit of an emergency fund saved now and am due a pay rise in November so this will hopefully see us through. Next task is to ring mortgage provider to see what fixes are available! 

fatbelly

Let us know what they are offering.

Not likely to be good news

sammyjammy

You haven't said if checked for UC entitlement?  With a child, rent and childcare costs its a genuine possibility and every little helps.

AdmittingDefeat

sammyjammy said:

You haven't said if checked for UC entitlement?  With a child, rent and childcare costs its a genuine possibility and every little helps.

Not entitled to anything! 

AdmittingDefeat

If anyone is interested in an update… 

Fixed our mortgage at 6.34% for 2 years, going from £497 to £673 per month from this month. So we’re having to find an extra £176 a month! I am due a pay rise soon which will be an extra £80ish a month. We will also have a monthly payment of £45 ending in November (forgot this in original SOA). Which accounts for £125- so £50 more a month to find. We have £300 in savings to make up the shortfall so should keep us afloat (providing no unexpected repairs crop up). Hoping for another pay rise early next year so this should hopefully make up the shortfall. 

RAS

Basically glad you can see a way through this situation.

But you do need an emergency fund, particularly as homeowners and with a car. Can you put any spare from OH commission not used to support the mortgage increase into a separate account, at least for the next six months? Aim for £500 starters, and then £1k.

You could also look around the house, identify things that you no longer use and plan a car boot sale etc for next spring? Even if it's only £200?

fatbelly

AdmittingDefeat said:

If anyone is interested in an update… 

Fixed our mortgage at 6.34% for 2 years, going from £497 to £673 per month from this month. So we’re having to find an extra £176 a month! I am due a pay rise soon which will be an extra £80ish a month. We will also have a monthly payment of £45 ending in November (forgot this in original SOA). Which accounts for £125- so £50 more a month to find. We have £300 in savings to make up the shortfall so should keep us afloat (providing no unexpected repairs crop up). Hoping for another pay rise early next year so this should hopefully make up the shortfall. 

Ok. Could have been worse, i guess.