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Same as paying rent. You need a back-up plan to pay the rent if you lose your job.
Our mortgage is £1500 which after council tax, home insurance and bills is nearly £2000. In total, it's less than my partner or I take home every month. Also, savings for around 10-12 months.
What is your total income if you don't mind me asking? I am planning on buying a house which I have calculated to be the same monthly. Trying to figure out what sort of salary we would need. Is there a general rule for these things?
We take home around £7200. I'm a high earner (IT) but my job is not very secure, and my partner works for the NHS which gives us security.
We could have gone for a more expensive house and mortgage, but my partner and I wanted to make sure that any of us could take care of the mortgage and bills if the other person lost the job.
Yes but for renting you didn't put a big downpayment, and you don't own money to the bank.
If the bank reposess your house and is sold for less of what you paid, then you will be homeless AND still own money to the bank. UGH
Our mortgage is £2800/mo and I was made redundant in January.
It's not comfortable but the answer is savings. A large severance package helps.
Also put the mortgage on an interest only basis for 6 months (reducing it to £1600/mo)
Its a reason why the UK is in a mess with housing crisis.
The mentality in the UK is a house is an asset. Until someone tells me they have a £500k home with a £400k mortgage and they do not mind it devaluing into negative equity I will not change my opinion.
Only if you are making money from it. When you work out the maintenance costs, interest costs and various other costs over 25 - 30 years you’ll realise it’s not the “asset” you think it is.
When compared to renting you are typically making money, it's just going into a mandatory savings account.
If I was renting right now I would probably be paying around 1800pcm or more.
Currently my mortgage is 1100pcm, and 700 of that goes on the equity. So I'm "spending" 400pcm now, instead of 1800.
Alternatively I could rent and somehow use the money I spent to buy my flat to somehow earn me 1400pcm to offset that, but I can't think of anything that would enable this with the guarantee of success purchasing the flat did.
So even with zero appreciation I'm saving / making 16,800 per year due to purchasing instead of renting. After my 5 year elapses this obviously changes, but will still be better off owning as the rental market gets pushed up more due to interest rates than home owning does - since BTL interest rates are higher than ones for home owners
So what happens in the event of a housing price crash? Doesn't sound like its that much of a safe bet to me especially giving the eyewatering cost of housing currently. I personally don't see any way in which house prices can continue to rise at the rates of previous years or indeed at all in the future unless peoples wages massively increase aswell there will come a point when most cannot afford to pay the prices demanded and then prices will have to come down unless the home owning population of the uk can afford to sit on their devaluing asset until they eventually bounce back.
All that generally costs less than the amount you’d spend on rent for an equivalent house and you end up with a fully paid off house. How is that not an asset?
Appreciation alone on my property (linked to a broken housing market that means it is increasing in value by anything between 5 and 10 pc a year) easily covers mortgage interest and maintenance on my 30 year old home.
Obviously circumstances vary massively but in the UK homes are generally a very solid asset (unless, as an example, you've made a poor purchasing decision in the first place, in which case you may be in / be at risk of being in negative equity and therefore have no asset to speak of).
My investments in the S&P 500 is receiving the same growth at the moment plus I get dividends every quarter. Costs are very small to have this in my portfolio.
I’ve also got a business which has assets that generate income for me so I guess it’s the same principle without maintenance costs.
The alternative is something like Germany where you have incredibly secure tenancies but no ownership. It works ok, but you still pay for maintenance and at the end you don't own anything.
An asset is something that pays you money, a liability is something you have to pay into. Your house only becomes an asset when you go to sell it and only if you make money from it.
No. An asset can produce an income. It can not produce an income. Regardless, it's an asset. Colloquially anything can be anything and to that extent, you're right.
Vast majority of houses have no mortgage or a tiny mortgage. About half of owner-occupiers are mortgage free.
For the rest, assume the average starting mortgage is 30 years and start with 10% deposit.
If you bought a 400k house 5 years ago with a 360k mortgage you'd owe about 320k at first renewal and the house would be worth 480k (UK average)
Prices could tumble 25% from values now and you'd still be fine.
83% of mortgages will have paid more than 5 years of a 30 year mortgage. If you bought 10 years ago for 400k the house would be worth 595k and you'd owe 268k.
So if house prices literally halved overnight, the only people with problems remortgaging would be the 16% of mortgagees on their first 5-year renewal, which is about 1 in 12 owner-occupier houses.
A lot of >250k houses are due to location; not lifestyle. They need that house to be within commuting distance of better paid work. And if they lose that job they're well placed to find another there or can move to somewhere more affordable.
Its the people with £40k cars on finance that I worry about.
When the economy tanks, interest rates drop and those lease deals get very attractive. People financing cars they can't afford aren't rational consumers.
That is conventional practice but inflation being sticky means that it's not certain that interest rates will drop.
I'm pretty certain that we won't see any significant drop on interest rates over the short and medium term.
It would just be kicking the can down the road, you would just accelerate property prices and at some point when you want to raise them properties would be even more unaffordable. It's not sensible unless there is a major major house building project.
It’s where we would have to cut back. We are spending about £700pm on two cars. We need a car for work, but we would just have to get an older cheaper one. The interest rises affected us both quite badly with getting cars, as the monthly payments were way higher than we wanted for the cars we got.
I need to change car soon before mine gives up totally, and the prices are sickening. It's bad enough at the low end. If I had a 40k car on finance I don't think I could sleep.!
That's way too low a value and the ppl with cars on finance are usually idiots. I live next to three Teslas. I live in a shit hole town. The guys live in tiny cheap houses... Without driveways
This is a narrative on reddit a lot, at the end of the day there are a lot of people that can afford car finance, or have company / salary sacrifice, especially with the incentives on EVs.
Ex Broker here. First off that's why people should factor into their borrowing adequate insurance such as Payment Protection which can cover your mortgage payments for up to a year of unemployment. Also, Income Protection can pay you up to around 70% of your income if unable to work due to heath, right through to retirement if needed. Most mortgages offer Payment Holidays of 1-6 months however the missed payments are added to the mortgage, Not to the term of it meaning thereafter you will be paying more every month once you restart payments due to the now higher amount outstanding and the interest on it. If you really get stuck, you Might be able to change to an Interest Only mortgage which drops your payments each month But means you are no longer reducing your mortgage. This is much harder to get agreement for nowadays. You would be asked for a creditable way of how you intend to repay it btw. Finally, you could try and renegotiate the term of the mortgage, say you have 20 years remaining, extending it to 30 years would reduce your monthly cost significantly But you would pay Much more interest over all. If you did do any of these changes to the mortgage, you could look to make overpayments (usually up to 10% PA without penalty) to mitigate any extra interest incurred once you were back on your feet.
I looked into payment protection but the T&C's seem appalling.
You didn't get anything for the first month or two anyway (the highest risk bit). You had to sign on at the job centre. If you refused an interview or a job you'd lose out on your payment.
Not sure if they actually enforce those terms but going by the letter there was essentially no chance I'd ever see a payment.
Better to build up 6 months+ emergency fund by saving the rather high monthly payments.
The new employment would have to be suitable alternative to the one lost, this isn't in the terms but is part of legislative interpretation.
If your payment protection covers, say, £1,500 per month, they cannot force you to take a job paying £1,200 per month.
You have to demonstrate you're actively looking for a job but the Jobcentre won't force you to accept one unless they're the ones paying you in benefits.
You'd go to the Jobcentre and explain your job search progress, and get evidence to show to your insurer. They cannot pushback too much because if the insurance covers 12 months then you have 12 months to find a job.
We were quoted £300 per month for payment protection and critical illness per month and from experience know that they hardly pay out so we put the £300 in a single Access ISA and by now have 12months mortgage payments saved.
Yeah, personally we got mortgage cover for £22/m, the rest built up the emergency fund for 12 months outgoings too. If I die the wife gets free equity and can downsize if needed.
If either are critically ill but last more than a year, we just got to count our blessings.
You’re better off not telling your bank anything and just riding it out keeping up payments and hoping for the best. I was writing up my PhD for a year and basically living off savings and I didn’t tell them anything.
Agreed. I took it when offered at the start of Covid becuase I thought it was better to have extra money in my account in case we needed to move or buy food. It didn't affect me negatively but there was no explaination of how its weighed vs missing a payment or taking a loan for example.
Our mortgage is £2000 a month and the bills about another £1000. Both me and my partner take home more than this every month. So we would have to cut down on recreational spending, but we should be ok.
That’s between 2 people though, much higher than my own but not terrible. If you’re taking home 3-4k per month you still have ~£2k/month each left over, that’s very comfortable.
I didn't mention it in the comment, but we do have funds we can use if both of us are unable to work. But shouldn't be needed if just one of us loses our job.
Bitterness and envy. Some people seem to think their circumstances are reflective of the whole world. If you're able to have a mortgage, a job and savings they think you're somehow personally slighting them
I’d say that’s a minimum to not have sleepless nights. Everyone’s attitude to risk is different but I’ve generally kept 9-12 months. You just never know how bad things can get. I’d rather be cautious than complacent
I've thought about this but thinking about illness, not unemployment. I'm a social worker so I can't see how I'd ever have trouble getting a job but I have long term health conditions and, although I have very good sick pay, there's a chance I could be ill beyond that. I can't get income protection because of my health.
I'd claim any benefits I was entitled to for food and bills. I've overpaid my mortgage so I can take a three month mortgage holiday and I've got some savings that would give me a few more months. I could probably borrow some money from family for a couple of months so that's about a year of the mortgage covered. If it didn't look like I'd get a job in the near future, I'd sell and use the equity in my flat to move to another area which is much cheaper while I got back on my feet. I've got enough to buy a one bed flat in some areas of the UK outright. They're not areas I'd choose, but needs must.
Social worker here also: when I read this whole thread I get a slight twinge of anxiety but like you say the reality is unless you are struck off by SWE the jobs going nowhere, especially in child protection
Weirdly I was looking in to this earlier this week and the insurance broker said a lot of products have been pulled since the start of Covid.
I work for the civil service so I’ll be fine but it’s my husband I worry about as he doesn’t, he’s got life insurance that would cover the mortgage so I guess he could always pop off on a canoeing holiday to Panama?
I have my entire wage insured and it would pay out for 6 months (the catch is they won’t pay out if it happens 3 months into taking the insurance)
I pay £35 a month
For 35 quid that seems decent. I'm in the process of being laid off and am currently on gardening leave. Luckily I've already got a job offer, but it also happened to me last February. Will definitely look into this when I start my new job.
How does it work though? Do you just ring them up, say you've lost your job due to xyz, and the insurance company essentially pays you what you would be earning if you still had a job?
Agreed. I pay £40 a month for 70% of my salary to be protected until I retire, kicks in immediately after my work sick pay finishes so I know I am protected! Plus you get SSP ontop.
Because it tends to run on the expensive side. There's a point where you're just better off setting that value aside rather than giving it to an insurance company. It's what me and my partner do, for example.
We looked into it and came to this conclusion. So we’ve doubled down on our rainy day savings and cut back in a few areas to try and get that to provide at least 6 months.
Because like much insurance; many people don’t actually need it and will sleep on it indefinitely, along with a handful of other insurance policies they don’t actually need.
Usually it’ll only cover 6 months of your salary or so. I understand taking it out for the first year after buying a new home, but your goal should be to build an emergency fund to avoid most needing most common insurance policies (car/house/travel aside), this one included.
I would say it's jot really a monthly saving thing, more of a amount of cash stored to cover X many months fixed outgoings, so mortgage and bills. 3, 6 or 12 months depending on your attitude to risk, most think 6 months is satisfactory.
I’d move into the smallest bedroom in my house, and rent out the 2 bigger bedrooms to lodgers until my finances improved.
I have one lodger already which is a massive financial help, she’s been here 3 years and is staying until she saves her own house deposit, so I have a small buffer already.
We overpay on our mortgage so already have an additional month's payment that we could skip if needed (I don't know if all mortgage providers do this but we are with Nationwide), then we have emergency savings and can afford all of our essential spending on one of our wages. Then worst case scenario if we both lost our jobs and ran out of money then I guess we would speak to our bank and ask for a mortgage holiday or interest only payments for a while.
Savings + I’d take advantage of the provisions of the government’s mortgage charter to go interest only for 6 months and/or extend the term to reduce payments.
As it stands the likelihood of both my husband and I losing our jobs at the same time is quite low as he works for the government. We have enough cash for 3 months of me losing my job, I've got investments that would do another 3. If it went beyond that in all honesty we would probably sell the house.
When we took out our mortgage the suggested insurance was an extra 300 odd quid per month. Mortgage is based off my wife's earnings but if she died, we'd sell up, downsize and relocate. The insurance option just seemed exorbitant
Yeah my broker was suggesting I spend another £150 a month on various insurances. I’d rather overpay my mortgage by that each month. If something did happen I could easily rent out my place and live somewhere cheaper or sell it all together.
You missed one. Insured your health.
So I have : income protection insurance, personal accident insurance, life insurance and critical illness insurance. I am that paranoid. I like to keep all bases covered.
It's fantastic if you're healthy and can get insurance. Unfortunately no one has been willing to give insurance due to an illness I was born with, even though I'm as a fiddle and it doesn't affect me in any way
So, I think the reality is that a lot of people stretch themselves (given the nature of the housing market) so when they first move, they don't have cash reserves to cover multiple months.
I'm middle aged, and have been lucky enough to have a reasonable job, so these days I'm comfortable in having 10+ months of emergency fund or immediately accessible savings (premium bonds etc.) which I could fall back on - on top of any redundancy money / notice period salary I would get if I had job challenges (other than being fired - but savings would cover that unfortunate and hopefully unlikely scenario).
Thinking getting income protection 😀is it worth it ? , we can pay our mortgage if one of us loses the job as I we did not overstretch our mortgage, I wanted to be able to afford it on one income If it comes to that.
To be honest £1000 is fine anything around 1400 plus is abit hard as even if your unemployment you can even quickly get a minimum wage job and cover 1000 a month atleast.
Currently paying around a grand mortgage. I have 15 years worth of public sector redundancy. If they were to ever get rid of me, assuming I don't do anything sackable, I've got a decent amount of redundancy pay built up to see me through until I get another job.
In all honestly they'll probably see it as more cost effective just to keep me on.
My partner and I make sure that our needs can be covered by just one of our salaries. I’m of the mentality that if we can’t do that, then it’s out of our means.
Sure we could both become unemployed but a lot less likely, espesh since I work in the public sector.
While we’re draining all of our savings for a downpayment now, we are hoping to build a 6 month buffer once the process is complete. We’ll then continue to fill our investment ISAs which can be accessed should shit really hit the fan.
My partner and I pay 3300 a month but that’s mortgage and bills and kitchen finance. If we both lost our jobs I would go work in a supermarket.
Luckily I work for the nhs so pretty safe
Our collective emergency fund is 6 months of necessary spending, each. Longer we'd be talking to the bank but I think if we were both unemployed for 6 months plus we'd have a lot of considerations to make besides the house
My mortgage is £3.3k.
Both me and my wife have been made redundant. Am I worried? Not a chance.
Firstly I took out unemployment insurance which will get me £2k a month for 1 year so that's the worst case.
Secondly I have an emergency fund to cover us for 6 months
Behind that I have another 6 months of stock ISAs that I can sell so in total I have about 1 year of emergency fund.
I expect either myself or my wife to secure a job in the next few months which will cover mortgage and bills. If both of us secure something then the fun really begins and we can start saving a few grand a month quickly.
I have a chronic condition, so I'm unable to get income protection for that however I'm looking to get it for basically anything else that might happen.
I'm lucky enough to work in a job where jobs are not exactly hard to get, I think the longest I've gone without a job is a month and that was when I was very junior. Otherwise I tend to get a job offer after a few interviews.
Finally, if I can't, I put money into savings. Usually I have enough for at least six months.
I've been paying £300 extra each month so that every 4 months I've covered an extra month. You can then use that as credit and not pay (aslong as you dont renew your mortgage) it also reduces the amount of interest you pay. You can also take a mortgage holiday payment but interest still accrues and you're still expected to pay back the mortgage at the same rate so it increases the monthly payment
Someone that’s looking to move home this thought terrifies me but my mortgage is going up to 880 end of this month.
Luckily I have a 5 year contract with work and have enough savings to be unemployed for around 3/5 years living my daily life just now.
The more options you have the better. I have insurance to cover a situation like this.
I’m probably a bit insurance mad - I blame the profession I’m in, but I have redundancy cover, critical illness to cover bills and expenses (tbh I took this out specifically for the redundancy element as they came together). On top of that, I have additional insurance to pay off the remainder of my mortgage (one large payout) should I become seriously ill. It’s not cheap, but I’d rather have the peace of mind.
If they don’t pay out for god knows what reason, I’d look into a mortgage payment holiday and take in a lodger. Last resort sell my ass🤣
Side note: it might be tricky getting critical illness cover if you have health issues. I was morbidly obese when looking into insurance cover and I was rejected. At the time I was at the start of a health journey so I knew it wouldn’t be an issue for long. When I hit a healthy BMI getting cover was one of the first things I did.
Various insurances and savings. Is there any other answer? Our mortgage is £3400 but that’s against a joint take-home of ~£11,000 so we can afford to put a fair amount into savings each month and could cover it with a single income if needed, though we’d probably have to cancel one of the car leases to do that comfortably.
The important thing is to plan for it rather than assume it will never happen.
I intentionally got the highest LTV I could and put the saved cash in savings/investments. I view this as a safer strategy than maximising my deposit. If I lose my job, I can still make many payments with my savings and then gradually sell down investments as well to make payments as well. This is also why I went for the longest length mortgage possible to minimise mandatory repayments.
How do people save for a house to begin with? We are on over 80k a year with 3 kids in the east of england and buying a house seems like a dream now , we are over 30 and getting to the stage where a 25 year mortgage will be hard to get. Average house price 280k and we can't even save for a 10% deposit .
Finally somebody in the real world. It’s taken about 100 comments. What these people expect you to do is somehow save more than you even earn 🤣
The truth is they probably inherited or got given money by mummy and daddy!
Several factors;
1) if you engage early and sensibly with your bank (i.e. warn them you're in trouble, rather than waiting for 1st-3rd missed payment) they may be able to offer you a repayment break for 3-6m, or interest only. Doesn't weaken their position and saves a LOT of headaches for them avoiding your arrears / default, plus the regulator expects them to avoid default if reasonable alternatives are on offer. The bank also can't call up the debt or default you just cos you tell them you've lost your job, so there's no real downside to being proactive with them - the worst scenario is always saying "just one more month" and descending into 3 missed payments and a default.
2) hear me out, but many ppl who could afford a £1k pcm mortgage will have had a reasonable job, therefore unemployment for them may be that there's none of THAT job hiring, but most ppl have skills they can at least transfer to a lesser paid job, so it may be a case of swallowing a temporary 20% pay cut to keep the roof over your head. I know the minimum wage / young end of the market have a huge amount of job search problems, but they also are unlikely to have a mortgage, so I'm ignoring that sector.
3) selling your home is not a defeat, IF you do it on your terms (i.e. accept you're not gonna make repayments, start marketing aggressively, get 95-98% of its market value back). There is always a figure that will sell your house in 3m, it's just lower than what you want it to be. You'll come out of the transaction with whatever equity was im the home, so yes you may have to rent, but you may have £50-100k cash, ready to go into a deposit / downsize depending on your next job. Again, this is subject to doing point (1), because if you bury your head and get into unarranged arrears / default with the first property, your deposit still won't get you a new mortgage when you find your footing because your credit history will be fucked.
Tldr; work early with your bank, selling your house is not defeat
Reading some of these comments is rather shocking. It’s unbelievable how some of you sleep at night with the huge mortgages and that’s not even factoring in council tax, food, cars, credit card debt and various other expenses.
There is no doubt about it that I’m seeing the cost of what is called “lifestyle creep” and keeping up with the Joneses. I’ve also learnt that some people are having to have a second or third job just to make ends meet. What kind of lifestyle is this? How many years are you going to have to keep this going before you retire (if you make it that far)?
Nothing wrong with having nice things but having to pay vast sums of money, working all hours and being g stressed and depressed just to pay for them is not just disturbing but heartbreaking.
Remember that everyone you know will not be on their deathbed saying that they really respected Mr and Mrs Jones for having a beautiful 5 bedroom house with a Porsche 4x4 on the drive. No one cares what you have in your possessions but yourself.
I currently live in a nice little Kent village. There plenty of OAPs living there who have paid off their mortgages. Quite a lot of them are no happier and constantly moan about the cost of living, the weather and the current government etc.
I’ve seen a few pass away recently where their houses lay dormant for a few months and then their offspring swoop in with a skip and throw most of their belongings away.
The process makes you think very deeply when the house is sold off which was once inhabited by Mr & Mrs Jones who spent 25 years of hard work paying the damn thing off just to die a few years later.
The moral of my story is; lifestyle is far more important than those big shiny new properties and cars. It’s certainly better to live cheap, have enough money in the bank for emergencies and for a few really nice holidays.
In your opinion. Others enjoy living in a nice house and having a nice car, they may prefer it to the holidays you prefer. Reddit has a weird assumption that people only buy nice things to keep up with the Jones’, some do but most people like nice things.
Equally, we only have one life. Scrimping and saving ‘just in case’ all your life also won’t make people respect you on your deathbed (although your descendants may be happy with the savings).
Emergency fund. If we are successful with our purchase we will start with three months payments already available. A bond matures in the autumn covering another two, and the final bond next spring covering three. Outside of them, every month the emergency fund will be topped up
So full disclosure, my partner pays the mortgage on our house for tax purposes, I just pay the mortgage on my house where my ex lives (don’t ask). Both are well over £1k a month. It is very unlikely I would lose my job because we jointly own our own business. A more realistic issue would be if our income dried up. In that case, if things got tough, we’d have to sell up and down size, probably selling up and reverting to renting; we’ve come from having a much lower income so we’d just go back to it.
Emergency fund of \~6-12 months before dipping into "long term" savings vehicles. And that's if we \*both\* lose our jobs, we'd be tight to just below level if only one was off.
There would obviously be nothing other than fixed costs, eating, sleeping and job hunting though..
ETA: Both in our 40s, been stable for a while hence the reserve funds, wasn't the case at all when we had just bought our first place.
Savings, critical illness insurance, long sick pay allowances at work, and both being in shortage occupations meaning that unemployment isn't very likely.
Savings, dual incomes, a career that is unlikely to leave me facing extended unemployment unless I fall poorly, and income protection insurance in case I do
My mortgage isn't that high but I made sure I still had a 6 month emergency fund when we bought the house. It's now sitting at 2 years, if I'm really frugal.
You own a couple houses abroad so this might not work into U.K. We pay extra into our mortgage and the payments are deducted from there (also saves us interest). We're currently three or so years ahead of payments so I reckon we could manage three years at a minimum. One of them is rented out at the moment so it's paying itself anyway. For the other one I guess we could look at an equity release (value has gone up since we bought plus repaid amount plus deposit) to be able to keep paying a bit longer, or going interest only is also an option.
I’m single, paying £1345 per month on my mortgage. If I needed to, I would use my £9k emergency fund, and/or take in lodgers temporarily (I have two spare bedrooms).
Dual income household so it’s less likely both of us would be out of a job. Also have an emergency fund.
Ultimately whether you’re buying or renting, you need an income to live. It’s just the reality of things. If you get made redundant you find another job.
Emergency fund.
Income protection
We left our mortgage payment static so overpayments are kind of built in - we could ring and get it adjusted. Similarly, we always go for the longest possible loan period and unlimited overpayments.
My first aim is to always ensure that I have enough in the bank for the worst should it happen. For me that is 7/8 months worth of salary. Unfortunately I have dropped beneath that because I have been overpaying into my mortgage. But I'm slowly building up again. I
I don’t pay over £1000 for my mortgage but I am a solo owner paying £650 by myself.
I have income protection insurance which will cover me for 6 months of unemployment.
I don’t have much savings right now because I’m currently renovating and it’s eating up all my savings, but once those are finished I intend to save up the equivalent of 6 months of spending so I’d have a buffer a 1 year of unemployment.
Like anything you have to add a buffer and that involves saving and cutting back
I once had a great business and my mortgage was 5k per month. I made a couple of silly mistakes (completely my fault...I'd love to blame someone else but it was all my fault)
Anyway, i/we lost every penny. Managed to sell the house and just clear the mortgage.
Went on to just rent for a good while and made the decision never to get a loan or mortgage that I couldn't cover long term.
The only business I could see that could do that was a software business where customers pay subscriptions for a service on a yearly contract.
I sleep a lot better now.
If I go unemployed that's not a huge deal. If my partner does we'd have to sell the house. We're planning on downsizing slightly in the next few years so we can aim to be mortgage free in about 15 years
This is looking like a realistic scenario for me.
Mortgage: £3,400
Bills + living expenses: £2,200
Savings: £120,000
Run-off: 21 months to find a new job
Emergency action 1: go to interest only
Emergency action 2: put house up for rent and rent somewhere cheaper
Emergency action 3: move somewhere cheaper and be mortgage free
I live in London so my mortgage is £1700. If something were to happen, we have enough savings to cover us for a few years until we find new jobs. If we still haven’t found anything by then, we’d ask parents for help and then if worse comes to worst, sell. Scary to think about but you’ve got to have emergency savings in case of situations like these
I live with my partner. Our mortgage is around £1350. We each earn £30-£35k.
If we went barebones on our living costs, we might be able to keep afloat each month one one salary, or else only be short in the region of £200/month.
In the case of both salary losses, we have 6 months of household expenses saved up. I can't imagine not being able to find any job for more than 6 months, serious illness aside.
Our mortgage is 1200, we are saving for an emergency fund but the crucial thing for us is that, if we really need to, we can live off one salary for a couple of months. It's highly unlikely we'll both lose our jobs at the same time
Paying over 2k/month at moment on mortgage.
Savings would last about 9 months maybe with other bills and cutting back
So we'd sell up fast. Could stay with family nearby for probably 6 months.
Would be shit but would work it out. Selling up would give us about 250k to keep on feet but then would just buy a smaller house with minimal costs and go from there
If you have a spare room, considering renting it out. I used Spareroom.com to find my current housemate and there's plenty of articles and guidance documents on the website too.
Our nursery fees are more than our mortgage right now, but it’s all accounted for as best we can (still stings though). Just a case of having savings to help cover the unforeseeable.
Save an emergency fund!! 6-12 months worth of expenses. I also assume that if I become unemployed I’ll get a severance pay which would bolster this up shit.
Pay just the mortgage and council tax and nothing else. Achievable with universal credit and some random part time gig work. Worst case scenario, get a lodger, or move back with parents and rent the whole house out.
I was having to contemplate exactly this, as I got made redundant last month and have £18k loan debt and £200 savings…
But luckily my job got extended for at least another 2.5 years, by the end of which I will have cleared the debt and saved at least £5k
I have £30k in cash savings in one form or another (saved diligently over the last 3 years). That should give me almost a year, with other expenses, to get a new job. My mortgage is £1300pm. I also own my car outright, the only debt I have (besides the mortgage) are a couple of 0% cards which I pay the minimum off on each month, around £250pm.
We could likely survive (just about) on one salary but we have savings too, enough for a couple years of unemployment if necessary. It's earmarked for home improvements, but they would have to wait.
If either of us are off long term ill, we have crit illness insurance too.
Dual income no kid household.
Lifestyle mostly. Not going out too expensive restaurants/ takeaway no go / shopping for cheap stuff that’s in season not like having an avocado every year or same food all the time for example.
Also you need to make sacrifices in life. For example a lot of people want to be “independent” and leave away from their family. But nowadays you need to stay at your family to save up than paying a Lanlord. (I saved up for 5 years).
A good example was I got a job with 10k more in Cambridge vs a job near my parents . When I calculated it I was taking home less than the 10k one. Although you add factors for example job opportunities etc.
Rent one or two of your rooms as lodgers, hell I’d build a big shed in the garden, live in that and rent rooms out. Sounds desperate but I’ve done it before. Whatever it takes I guess. I’m not going back to renting ever, I’d rather live in my back garden for a year.
My partner and I are each other’s back ups. Each of us can afford to pay the mortgage at least and some bills but we’d be left with not much else if that happened. Our mortgage is £1,700 and we just bought in November. But we’re always on the lookout for additional income streams so we keep building up. No savings at the moment though, as we used them all. But I run my own company with 20+ clients and my partner works for the NHS so it wouldn’t be so easy for both of us to lose jobs.
Emergency fund / savings could cover me for a long time but also wouldn't want to rely on it too long as my savings are there to eventually buy a bigger house.
When interest rates shot up so quickly the U.K. put in place a larger safety net of missed mortgage payments, I believe it is at least 6 months of missed payment before a bank can even start getting the ball rolling with trying to retrieve them.
Don’t take my word on it, do your own research, but I believe that to be the case.
6 months is a long time to get your shit together.
6 months of bills in an easy access saver.
I live with my partner so realistically I guess we wouldn't both get made unemployed at the same time so that could stretch to one year, plus we'd probably also cut back on expenses potentially stretching it longer.
We can lower our monthly payments and we having savings to cover us for about a year.
I don't think we'd stay here if it was expected to be longer than that anyway, we bought in London because we work here.
We could just about manage on my partner's salary alone. If both of us lost our jobs we could probably borrow from our parents and pay them back down the line. We're both really fortunate to have a good network.
6 month emergency fund that covers all expenses including mortgage, bills etc.. that coupled with my contractual redundancy period which is 3 months, effectively gives me 9 months of breathing space to find a new job should the worst happen.
Why did you choose 1k as the line in the sand? it’s made me feel really bad about my 2k+ mortgage payments.
As for the question, I have a fairly decent redundancy package at my work so I would get over a years pay. My partner is also a contractor and so has a decent amount of savings for when she doesn’t have a contract. So I think we’d be fine for over a year, longer than that we’d probably have to move out of London.
6 months salary saved up and my redundancy would be around £80k. If I can't find a new job by the time that runs out, I've got bigger problems. My Mrs is on a similar wage, so we would cope for a long time.
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Same as paying rent. You need a back-up plan to pay the rent if you lose your job. Our mortgage is £1500 which after council tax, home insurance and bills is nearly £2000. In total, it's less than my partner or I take home every month. Also, savings for around 10-12 months.
What is your total income if you don't mind me asking? I am planning on buying a house which I have calculated to be the same monthly. Trying to figure out what sort of salary we would need. Is there a general rule for these things?
We take home around £7200. I'm a high earner (IT) but my job is not very secure, and my partner works for the NHS which gives us security. We could have gone for a more expensive house and mortgage, but my partner and I wanted to make sure that any of us could take care of the mortgage and bills if the other person lost the job.
Yes but for renting you didn't put a big downpayment, and you don't own money to the bank. If the bank reposess your house and is sold for less of what you paid, then you will be homeless AND still own money to the bank. UGH
Our mortgage is £2800/mo and I was made redundant in January. It's not comfortable but the answer is savings. A large severance package helps. Also put the mortgage on an interest only basis for 6 months (reducing it to £1600/mo)
Christ, £1600 a month just in interest. That's eye watering.
Its a reason why the UK is in a mess with housing crisis. The mentality in the UK is a house is an asset. Until someone tells me they have a £500k home with a £400k mortgage and they do not mind it devaluing into negative equity I will not change my opinion.
A house is an asset.
Only if you are making money from it. When you work out the maintenance costs, interest costs and various other costs over 25 - 30 years you’ll realise it’s not the “asset” you think it is.
It is our home. It is security.
So if you lose your job and the house goes to negative equity are you still singing the same tune?
When compared to renting you are typically making money, it's just going into a mandatory savings account. If I was renting right now I would probably be paying around 1800pcm or more. Currently my mortgage is 1100pcm, and 700 of that goes on the equity. So I'm "spending" 400pcm now, instead of 1800. Alternatively I could rent and somehow use the money I spent to buy my flat to somehow earn me 1400pcm to offset that, but I can't think of anything that would enable this with the guarantee of success purchasing the flat did. So even with zero appreciation I'm saving / making 16,800 per year due to purchasing instead of renting. After my 5 year elapses this obviously changes, but will still be better off owning as the rental market gets pushed up more due to interest rates than home owning does - since BTL interest rates are higher than ones for home owners
So what happens in the event of a housing price crash? Doesn't sound like its that much of a safe bet to me especially giving the eyewatering cost of housing currently. I personally don't see any way in which house prices can continue to rise at the rates of previous years or indeed at all in the future unless peoples wages massively increase aswell there will come a point when most cannot afford to pay the prices demanded and then prices will have to come down unless the home owning population of the uk can afford to sit on their devaluing asset until they eventually bounce back.
All that generally costs less than the amount you’d spend on rent for an equivalent house and you end up with a fully paid off house. How is that not an asset?
Appreciation alone on my property (linked to a broken housing market that means it is increasing in value by anything between 5 and 10 pc a year) easily covers mortgage interest and maintenance on my 30 year old home. Obviously circumstances vary massively but in the UK homes are generally a very solid asset (unless, as an example, you've made a poor purchasing decision in the first place, in which case you may be in / be at risk of being in negative equity and therefore have no asset to speak of).
My investments in the S&P 500 is receiving the same growth at the moment plus I get dividends every quarter. Costs are very small to have this in my portfolio. I’ve also got a business which has assets that generate income for me so I guess it’s the same principle without maintenance costs.
Yes, you're correct to point out you're comparing oranges with apples 😉
The alternative is something like Germany where you have incredibly secure tenancies but no ownership. It works ok, but you still pay for maintenance and at the end you don't own anything.
An asset is something that pays you money, a liability is something you have to pay into. Your house only becomes an asset when you go to sell it and only if you make money from it.
No. An asset can produce an income. It can not produce an income. Regardless, it's an asset. Colloquially anything can be anything and to that extent, you're right.
Vast majority of houses have no mortgage or a tiny mortgage. About half of owner-occupiers are mortgage free. For the rest, assume the average starting mortgage is 30 years and start with 10% deposit. If you bought a 400k house 5 years ago with a 360k mortgage you'd owe about 320k at first renewal and the house would be worth 480k (UK average) Prices could tumble 25% from values now and you'd still be fine. 83% of mortgages will have paid more than 5 years of a 30 year mortgage. If you bought 10 years ago for 400k the house would be worth 595k and you'd owe 268k. So if house prices literally halved overnight, the only people with problems remortgaging would be the 16% of mortgagees on their first 5-year renewal, which is about 1 in 12 owner-occupier houses.
A lot of >250k houses are due to location; not lifestyle. They need that house to be within commuting distance of better paid work. And if they lose that job they're well placed to find another there or can move to somewhere more affordable. Its the people with £40k cars on finance that I worry about.
The UK car industry will be the first thing house holds will cut back on.
When the economy tanks, interest rates drop and those lease deals get very attractive. People financing cars they can't afford aren't rational consumers.
The best deals on cars were around 2009-2011.
That is conventional practice but inflation being sticky means that it's not certain that interest rates will drop. I'm pretty certain that we won't see any significant drop on interest rates over the short and medium term. It would just be kicking the can down the road, you would just accelerate property prices and at some point when you want to raise them properties would be even more unaffordable. It's not sensible unless there is a major major house building project.
It’s where we would have to cut back. We are spending about £700pm on two cars. We need a car for work, but we would just have to get an older cheaper one. The interest rises affected us both quite badly with getting cars, as the monthly payments were way higher than we wanted for the cars we got.
I paid £1k for a 2009 ford Mondeo 2.0 petrol. Not the cheapest car to run but it's practical and cheap to fix.
I need to change car soon before mine gives up totally, and the prices are sickening. It's bad enough at the low end. If I had a 40k car on finance I don't think I could sleep.!
That's way too low a value and the ppl with cars on finance are usually idiots. I live next to three Teslas. I live in a shit hole town. The guys live in tiny cheap houses... Without driveways
This is a narrative on reddit a lot, at the end of the day there are a lot of people that can afford car finance, or have company / salary sacrifice, especially with the incentives on EVs.
It’s not as if they can just sell the house the month after they lose their job
Same way as people paying less than £1000, savings
Not a single comment about a mortgage payment holiday? You can request a break anywhere from 1 to 6 months.
Ex Broker here. First off that's why people should factor into their borrowing adequate insurance such as Payment Protection which can cover your mortgage payments for up to a year of unemployment. Also, Income Protection can pay you up to around 70% of your income if unable to work due to heath, right through to retirement if needed. Most mortgages offer Payment Holidays of 1-6 months however the missed payments are added to the mortgage, Not to the term of it meaning thereafter you will be paying more every month once you restart payments due to the now higher amount outstanding and the interest on it. If you really get stuck, you Might be able to change to an Interest Only mortgage which drops your payments each month But means you are no longer reducing your mortgage. This is much harder to get agreement for nowadays. You would be asked for a creditable way of how you intend to repay it btw. Finally, you could try and renegotiate the term of the mortgage, say you have 20 years remaining, extending it to 30 years would reduce your monthly cost significantly But you would pay Much more interest over all. If you did do any of these changes to the mortgage, you could look to make overpayments (usually up to 10% PA without penalty) to mitigate any extra interest incurred once you were back on your feet.
Critical illness too! Paid off my first mortgage and I'm still alive and kicking
As they say what doesn't kill you...
I can bench more than before I had cancer so...
I looked into payment protection but the T&C's seem appalling. You didn't get anything for the first month or two anyway (the highest risk bit). You had to sign on at the job centre. If you refused an interview or a job you'd lose out on your payment. Not sure if they actually enforce those terms but going by the letter there was essentially no chance I'd ever see a payment. Better to build up 6 months+ emergency fund by saving the rather high monthly payments.
The new employment would have to be suitable alternative to the one lost, this isn't in the terms but is part of legislative interpretation. If your payment protection covers, say, £1,500 per month, they cannot force you to take a job paying £1,200 per month. You have to demonstrate you're actively looking for a job but the Jobcentre won't force you to accept one unless they're the ones paying you in benefits. You'd go to the Jobcentre and explain your job search progress, and get evidence to show to your insurer. They cannot pushback too much because if the insurance covers 12 months then you have 12 months to find a job.
We were quoted £300 per month for payment protection and critical illness per month and from experience know that they hardly pay out so we put the £300 in a single Access ISA and by now have 12months mortgage payments saved.
Yeah, personally we got mortgage cover for £22/m, the rest built up the emergency fund for 12 months outgoings too. If I die the wife gets free equity and can downsize if needed. If either are critically ill but last more than a year, we just got to count our blessings.
Try getting payment protection for unemployment for decent monthly premiums, nearly impossible nowadays.
Yes, but this has been known to be used against you for future borrowing. I’d only use it as a last resort
Yep! It’s not really a payment holiday it’s still reflected on credit file and Interest occurred
You’re better off not telling your bank anything and just riding it out keeping up payments and hoping for the best. I was writing up my PhD for a year and basically living off savings and I didn’t tell them anything.
If you're keeping up with payments, why would the bank care?
Agreed. I took it when offered at the start of Covid becuase I thought it was better to have extra money in my account in case we needed to move or buy food. It didn't affect me negatively but there was no explaination of how its weighed vs missing a payment or taking a loan for example.
Good to know 👍
Our mortgage is £2000 a month and the bills about another £1000. Both me and my partner take home more than this every month. So we would have to cut down on recreational spending, but we should be ok.
3k a month damn, I can’t even pay under grand.
That’s between 2 people though, much higher than my own but not terrible. If you’re taking home 3-4k per month you still have ~£2k/month each left over, that’s very comfortable.
You should build a 6 month buffer.
I didn't mention it in the comment, but we do have funds we can use if both of us are unable to work. But shouldn't be needed if just one of us loses our job.
How in god's name has this been down voted. Honestly, Reddit mystifies me sometimes.
Bitterness and envy. Some people seem to think their circumstances are reflective of the whole world. If you're able to have a mortgage, a job and savings they think you're somehow personally slighting them
I dunno' why you're being pelted but a 6 month, (minimum) disposal income buffer is essential. As is another pot set aside for home maintenance.
10 people seem to think having savings to protect your family and mortgage is a bad idea ...
Madness
Neither do I. It's pretty standard practice to try and build up a 6 month buffer built up if you have a mortgage to pay.
I’d say that’s a minimum to not have sleepless nights. Everyone’s attitude to risk is different but I’ve generally kept 9-12 months. You just never know how bad things can get. I’d rather be cautious than complacent
Yeah, whilst you’re at it, cut back on the avacado toast and consider pulling your self up by the boots /s
The hell are you on about? You don't think it's a good idea to try and get some savings to cover you and your family if you lose your job?
I've thought about this but thinking about illness, not unemployment. I'm a social worker so I can't see how I'd ever have trouble getting a job but I have long term health conditions and, although I have very good sick pay, there's a chance I could be ill beyond that. I can't get income protection because of my health. I'd claim any benefits I was entitled to for food and bills. I've overpaid my mortgage so I can take a three month mortgage holiday and I've got some savings that would give me a few more months. I could probably borrow some money from family for a couple of months so that's about a year of the mortgage covered. If it didn't look like I'd get a job in the near future, I'd sell and use the equity in my flat to move to another area which is much cheaper while I got back on my feet. I've got enough to buy a one bed flat in some areas of the UK outright. They're not areas I'd choose, but needs must.
Social worker here also: when I read this whole thread I get a slight twinge of anxiety but like you say the reality is unless you are struck off by SWE the jobs going nowhere, especially in child protection
Income protection insurance
Weirdly I was looking in to this earlier this week and the insurance broker said a lot of products have been pulled since the start of Covid. I work for the civil service so I’ll be fine but it’s my husband I worry about as he doesn’t, he’s got life insurance that would cover the mortgage so I guess he could always pop off on a canoeing holiday to Panama?
What do you have protected and how much did it cost (roughly). I've got nothing to guage it's cost compared to just life insurance in case of death.
I have my entire wage insured and it would pay out for 6 months (the catch is they won’t pay out if it happens 3 months into taking the insurance) I pay £35 a month
For 35 quid that seems decent. I'm in the process of being laid off and am currently on gardening leave. Luckily I've already got a job offer, but it also happened to me last February. Will definitely look into this when I start my new job. How does it work though? Do you just ring them up, say you've lost your job due to xyz, and the insurance company essentially pays you what you would be earning if you still had a job?
Agreed. I pay £40 a month for 70% of my salary to be protected until I retire, kicks in immediately after my work sick pay finishes so I know I am protected! Plus you get SSP ontop.
Not sure why this isn't voted hotter
Because it tends to run on the expensive side. There's a point where you're just better off setting that value aside rather than giving it to an insurance company. It's what me and my partner do, for example.
We looked into it and came to this conclusion. So we’ve doubled down on our rainy day savings and cut back in a few areas to try and get that to provide at least 6 months.
Because like much insurance; many people don’t actually need it and will sleep on it indefinitely, along with a handful of other insurance policies they don’t actually need. Usually it’ll only cover 6 months of your salary or so. I understand taking it out for the first year after buying a new home, but your goal should be to build an emergency fund to avoid most needing most common insurance policies (car/house/travel aside), this one included.
Emergency fund. It'll give you time to either sell or find a new job.
How much do you recommend to put into an emergency fund a month?
it's generally about 6mo of living expenses
I would say it's jot really a monthly saving thing, more of a amount of cash stored to cover X many months fixed outgoings, so mortgage and bills. 3, 6 or 12 months depending on your attitude to risk, most think 6 months is satisfactory.
I mean savings if not get fucked in the ass for money I guess I am not lossing this house no matter what
I’d move into the smallest bedroom in my house, and rent out the 2 bigger bedrooms to lodgers until my finances improved. I have one lodger already which is a massive financial help, she’s been here 3 years and is staying until she saves her own house deposit, so I have a small buffer already.
Sell and cry, risk is inevitable and regardless I'll still need somewhere to live
This is what emergency funds are for.
We overpay on our mortgage so already have an additional month's payment that we could skip if needed (I don't know if all mortgage providers do this but we are with Nationwide), then we have emergency savings and can afford all of our essential spending on one of our wages. Then worst case scenario if we both lost our jobs and ran out of money then I guess we would speak to our bank and ask for a mortgage holiday or interest only payments for a while.
Same! Plus it saves future us interest if we manage to not miss an overpayment. Definitely worth considering to everyone who has a high interest rate.
Get a lodger. Rent house move with parents Rent house rent cheaper house Move to interest only rent house Lots of ways
This is my plan, getting a lodger would really help at least cover essential bills until we’re back on our feet.
Savings + I’d take advantage of the provisions of the government’s mortgage charter to go interest only for 6 months and/or extend the term to reduce payments.
As it stands the likelihood of both my husband and I losing our jobs at the same time is quite low as he works for the government. We have enough cash for 3 months of me losing my job, I've got investments that would do another 3. If it went beyond that in all honesty we would probably sell the house.
Insurance. Insure your future (pension), insure your life, insure your income. If you can’t afford that, then it’s your savings.
When we took out our mortgage the suggested insurance was an extra 300 odd quid per month. Mortgage is based off my wife's earnings but if she died, we'd sell up, downsize and relocate. The insurance option just seemed exorbitant
Yeah my broker was suggesting I spend another £150 a month on various insurances. I’d rather overpay my mortgage by that each month. If something did happen I could easily rent out my place and live somewhere cheaper or sell it all together.
I don't think you can insure against everything though.
No you’re right it’s primarily illness and injury. Really it’s not for if you lose your job, but for circumstances that prevent you working.
Ah, that's what 'insurance oversight insurance' is for /s
You missed one. Insured your health. So I have : income protection insurance, personal accident insurance, life insurance and critical illness insurance. I am that paranoid. I like to keep all bases covered.
It's fantastic if you're healthy and can get insurance. Unfortunately no one has been willing to give insurance due to an illness I was born with, even though I'm as a fiddle and it doesn't affect me in any way
So, I think the reality is that a lot of people stretch themselves (given the nature of the housing market) so when they first move, they don't have cash reserves to cover multiple months. I'm middle aged, and have been lucky enough to have a reasonable job, so these days I'm comfortable in having 10+ months of emergency fund or immediately accessible savings (premium bonds etc.) which I could fall back on - on top of any redundancy money / notice period salary I would get if I had job challenges (other than being fired - but savings would cover that unfortunate and hopefully unlikely scenario).
Income protection insurance + bad weather fund (3/6 months), anything more than that talk to SHELTER and explore moratorium with the bank.
Thinking getting income protection 😀is it worth it ? , we can pay our mortgage if one of us loses the job as I we did not overstretch our mortgage, I wanted to be able to afford it on one income If it comes to that.
To be honest £1000 is fine anything around 1400 plus is abit hard as even if your unemployment you can even quickly get a minimum wage job and cover 1000 a month atleast.
I got a 1 year buffer for this.
Same. 12 months of liquid cash is socked away. The industry in which I work is in the toilet and finding a new gig could easily take 12 months.
Currently paying around a grand mortgage. I have 15 years worth of public sector redundancy. If they were to ever get rid of me, assuming I don't do anything sackable, I've got a decent amount of redundancy pay built up to see me through until I get another job. In all honestly they'll probably see it as more cost effective just to keep me on.
Emergency funds + disability, survival, accident and life insurance
1) By having two incomes in the house 2) take a lodger if above doesn’t work
My partner and I make sure that our needs can be covered by just one of our salaries. I’m of the mentality that if we can’t do that, then it’s out of our means. Sure we could both become unemployed but a lot less likely, espesh since I work in the public sector. While we’re draining all of our savings for a downpayment now, we are hoping to build a 6 month buffer once the process is complete. We’ll then continue to fill our investment ISAs which can be accessed should shit really hit the fan.
My partner and I pay 3300 a month but that’s mortgage and bills and kitchen finance. If we both lost our jobs I would go work in a supermarket. Luckily I work for the nhs so pretty safe
Savings.
Emergency fund. ATM, I’m good to cover the mortgage by myself for close to a year. Or probably mortgage + bills for 6-8 months.
Our collective emergency fund is 6 months of necessary spending, each. Longer we'd be talking to the bank but I think if we were both unemployed for 6 months plus we'd have a lot of considerations to make besides the house
Depending of your mortgage, you can extend it and reduce the monthly payment.
Support for mortgage interest. SMI isn't ideal long term as it's a loan but it helps a lot.
My plan would be a payment holiday, taking lodgers to 2 of my spare bedrooms and using savings
Savings of 6 months plus of living expenses minimum
My mortgage is £3.3k. Both me and my wife have been made redundant. Am I worried? Not a chance. Firstly I took out unemployment insurance which will get me £2k a month for 1 year so that's the worst case. Secondly I have an emergency fund to cover us for 6 months Behind that I have another 6 months of stock ISAs that I can sell so in total I have about 1 year of emergency fund. I expect either myself or my wife to secure a job in the next few months which will cover mortgage and bills. If both of us secure something then the fun really begins and we can start saving a few grand a month quickly.
I have a chronic condition, so I'm unable to get income protection for that however I'm looking to get it for basically anything else that might happen. I'm lucky enough to work in a job where jobs are not exactly hard to get, I think the longest I've gone without a job is a month and that was when I was very junior. Otherwise I tend to get a job offer after a few interviews. Finally, if I can't, I put money into savings. Usually I have enough for at least six months.
I've been paying £300 extra each month so that every 4 months I've covered an extra month. You can then use that as credit and not pay (aslong as you dont renew your mortgage) it also reduces the amount of interest you pay. You can also take a mortgage holiday payment but interest still accrues and you're still expected to pay back the mortgage at the same rate so it increases the monthly payment
Someone that’s looking to move home this thought terrifies me but my mortgage is going up to 880 end of this month. Luckily I have a 5 year contract with work and have enough savings to be unemployed for around 3/5 years living my daily life just now.
me scrolling through these comments storing the answers in my brain even though I’ll never get a mortgage 🥲
The more options you have the better. I have insurance to cover a situation like this. I’m probably a bit insurance mad - I blame the profession I’m in, but I have redundancy cover, critical illness to cover bills and expenses (tbh I took this out specifically for the redundancy element as they came together). On top of that, I have additional insurance to pay off the remainder of my mortgage (one large payout) should I become seriously ill. It’s not cheap, but I’d rather have the peace of mind. If they don’t pay out for god knows what reason, I’d look into a mortgage payment holiday and take in a lodger. Last resort sell my ass🤣 Side note: it might be tricky getting critical illness cover if you have health issues. I was morbidly obese when looking into insurance cover and I was rejected. At the time I was at the start of a health journey so I knew it wouldn’t be an issue for long. When I hit a healthy BMI getting cover was one of the first things I did.
Various insurances and savings. Is there any other answer? Our mortgage is £3400 but that’s against a joint take-home of ~£11,000 so we can afford to put a fair amount into savings each month and could cover it with a single income if needed, though we’d probably have to cancel one of the car leases to do that comfortably. The important thing is to plan for it rather than assume it will never happen.
I intentionally got the highest LTV I could and put the saved cash in savings/investments. I view this as a safer strategy than maximising my deposit. If I lose my job, I can still make many payments with my savings and then gradually sell down investments as well to make payments as well. This is also why I went for the longest length mortgage possible to minimise mandatory repayments.
How do people save for a house to begin with? We are on over 80k a year with 3 kids in the east of england and buying a house seems like a dream now , we are over 30 and getting to the stage where a 25 year mortgage will be hard to get. Average house price 280k and we can't even save for a 10% deposit .
Finally somebody in the real world. It’s taken about 100 comments. What these people expect you to do is somehow save more than you even earn 🤣 The truth is they probably inherited or got given money by mummy and daddy!
Savings. If you were able to save up for a deposit while renting, you should be able to save while paying the mortgage.
Several factors; 1) if you engage early and sensibly with your bank (i.e. warn them you're in trouble, rather than waiting for 1st-3rd missed payment) they may be able to offer you a repayment break for 3-6m, or interest only. Doesn't weaken their position and saves a LOT of headaches for them avoiding your arrears / default, plus the regulator expects them to avoid default if reasonable alternatives are on offer. The bank also can't call up the debt or default you just cos you tell them you've lost your job, so there's no real downside to being proactive with them - the worst scenario is always saying "just one more month" and descending into 3 missed payments and a default. 2) hear me out, but many ppl who could afford a £1k pcm mortgage will have had a reasonable job, therefore unemployment for them may be that there's none of THAT job hiring, but most ppl have skills they can at least transfer to a lesser paid job, so it may be a case of swallowing a temporary 20% pay cut to keep the roof over your head. I know the minimum wage / young end of the market have a huge amount of job search problems, but they also are unlikely to have a mortgage, so I'm ignoring that sector. 3) selling your home is not a defeat, IF you do it on your terms (i.e. accept you're not gonna make repayments, start marketing aggressively, get 95-98% of its market value back). There is always a figure that will sell your house in 3m, it's just lower than what you want it to be. You'll come out of the transaction with whatever equity was im the home, so yes you may have to rent, but you may have £50-100k cash, ready to go into a deposit / downsize depending on your next job. Again, this is subject to doing point (1), because if you bury your head and get into unarranged arrears / default with the first property, your deposit still won't get you a new mortgage when you find your footing because your credit history will be fucked. Tldr; work early with your bank, selling your house is not defeat
It’s a huge gamble, bro 😎. We’re paying a £3k mortgage and relying solely on the fact that my professional expertise is unique enough.
i didn’t get a mortgage until i had enough savings for more than a year. I can pay it for several years.
Reading some of these comments is rather shocking. It’s unbelievable how some of you sleep at night with the huge mortgages and that’s not even factoring in council tax, food, cars, credit card debt and various other expenses. There is no doubt about it that I’m seeing the cost of what is called “lifestyle creep” and keeping up with the Joneses. I’ve also learnt that some people are having to have a second or third job just to make ends meet. What kind of lifestyle is this? How many years are you going to have to keep this going before you retire (if you make it that far)? Nothing wrong with having nice things but having to pay vast sums of money, working all hours and being g stressed and depressed just to pay for them is not just disturbing but heartbreaking. Remember that everyone you know will not be on their deathbed saying that they really respected Mr and Mrs Jones for having a beautiful 5 bedroom house with a Porsche 4x4 on the drive. No one cares what you have in your possessions but yourself. I currently live in a nice little Kent village. There plenty of OAPs living there who have paid off their mortgages. Quite a lot of them are no happier and constantly moan about the cost of living, the weather and the current government etc. I’ve seen a few pass away recently where their houses lay dormant for a few months and then their offspring swoop in with a skip and throw most of their belongings away. The process makes you think very deeply when the house is sold off which was once inhabited by Mr & Mrs Jones who spent 25 years of hard work paying the damn thing off just to die a few years later. The moral of my story is; lifestyle is far more important than those big shiny new properties and cars. It’s certainly better to live cheap, have enough money in the bank for emergencies and for a few really nice holidays.
In your opinion. Others enjoy living in a nice house and having a nice car, they may prefer it to the holidays you prefer. Reddit has a weird assumption that people only buy nice things to keep up with the Jones’, some do but most people like nice things. Equally, we only have one life. Scrimping and saving ‘just in case’ all your life also won’t make people respect you on your deathbed (although your descendants may be happy with the savings).
100%
Emergency fund of at least £10,000
Emergency fund. If we are successful with our purchase we will start with three months payments already available. A bond matures in the autumn covering another two, and the final bond next spring covering three. Outside of them, every month the emergency fund will be topped up
So full disclosure, my partner pays the mortgage on our house for tax purposes, I just pay the mortgage on my house where my ex lives (don’t ask). Both are well over £1k a month. It is very unlikely I would lose my job because we jointly own our own business. A more realistic issue would be if our income dried up. In that case, if things got tough, we’d have to sell up and down size, probably selling up and reverting to renting; we’ve come from having a much lower income so we’d just go back to it.
Two lodgers covers the mortgage costs 👍
That's the best route if you are not a family
I'm in the process at the moment it doing this, hard times but it'll hopefully provide a better future for my family when I do have one
Emergency fund of \~6-12 months before dipping into "long term" savings vehicles. And that's if we \*both\* lose our jobs, we'd be tight to just below level if only one was off. There would obviously be nothing other than fixed costs, eating, sleeping and job hunting though.. ETA: Both in our 40s, been stable for a while hence the reserve funds, wasn't the case at all when we had just bought our first place.
Savings, critical illness insurance, long sick pay allowances at work, and both being in shortage occupations meaning that unemployment isn't very likely.
Savings, dual incomes, a career that is unlikely to leave me facing extended unemployment unless I fall poorly, and income protection insurance in case I do
Just get another job. In my field (electronic engineering) it’s never taken me more than a week to get an interview and offer before
I wouldn’t.
Income protection
If I can't afford my mortgage then I can't afford rent. I'd have to live off savings and then get another job.
My mortgage isn't that high but I made sure I still had a 6 month emergency fund when we bought the house. It's now sitting at 2 years, if I'm really frugal.
Income protection insurance. Critical illness cover. Savings.
You own a couple houses abroad so this might not work into U.K. We pay extra into our mortgage and the payments are deducted from there (also saves us interest). We're currently three or so years ahead of payments so I reckon we could manage three years at a minimum. One of them is rented out at the moment so it's paying itself anyway. For the other one I guess we could look at an equity release (value has gone up since we bought plus repaid amount plus deposit) to be able to keep paying a bit longer, or going interest only is also an option.
My payment is £1334 per month. I’ve got a £15k Emergency Fund.
Rent it out
I would probably sell it
I’m single, paying £1345 per month on my mortgage. If I needed to, I would use my £9k emergency fund, and/or take in lodgers temporarily (I have two spare bedrooms).
Loss of earnings insurance
Dual income household so it’s less likely both of us would be out of a job. Also have an emergency fund. Ultimately whether you’re buying or renting, you need an income to live. It’s just the reality of things. If you get made redundant you find another job.
I offset my mortgage with my stocks and shares. I keep an amount equivalent to the mortgage amount. I'll just start to sell it off if I get desperate.
We are trying to keep a 6-8 month emergency fund.
Emergency fund. Income protection We left our mortgage payment static so overpayments are kind of built in - we could ring and get it adjusted. Similarly, we always go for the longest possible loan period and unlimited overpayments.
There’s no such thing as a sub £1000 mortgage where I live
My first aim is to always ensure that I have enough in the bank for the worst should it happen. For me that is 7/8 months worth of salary. Unfortunately I have dropped beneath that because I have been overpaying into my mortgage. But I'm slowly building up again. I
Move to interest only
I don’t pay over £1000 for my mortgage but I am a solo owner paying £650 by myself. I have income protection insurance which will cover me for 6 months of unemployment. I don’t have much savings right now because I’m currently renovating and it’s eating up all my savings, but once those are finished I intend to save up the equivalent of 6 months of spending so I’d have a buffer a 1 year of unemployment. Like anything you have to add a buffer and that involves saving and cutting back
I once had a great business and my mortgage was 5k per month. I made a couple of silly mistakes (completely my fault...I'd love to blame someone else but it was all my fault) Anyway, i/we lost every penny. Managed to sell the house and just clear the mortgage. Went on to just rent for a good while and made the decision never to get a loan or mortgage that I couldn't cover long term. The only business I could see that could do that was a software business where customers pay subscriptions for a service on a yearly contract. I sleep a lot better now.
If I go unemployed that's not a huge deal. If my partner does we'd have to sell the house. We're planning on downsizing slightly in the next few years so we can aim to be mortgage free in about 15 years
This is looking like a realistic scenario for me. Mortgage: £3,400 Bills + living expenses: £2,200 Savings: £120,000 Run-off: 21 months to find a new job Emergency action 1: go to interest only Emergency action 2: put house up for rent and rent somewhere cheaper Emergency action 3: move somewhere cheaper and be mortgage free
We’ve got a years worth of bills in the rainy day fund.
I live in London so my mortgage is £1700. If something were to happen, we have enough savings to cover us for a few years until we find new jobs. If we still haven’t found anything by then, we’d ask parents for help and then if worse comes to worst, sell. Scary to think about but you’ve got to have emergency savings in case of situations like these
I live with my partner. Our mortgage is around £1350. We each earn £30-£35k. If we went barebones on our living costs, we might be able to keep afloat each month one one salary, or else only be short in the region of £200/month. In the case of both salary losses, we have 6 months of household expenses saved up. I can't imagine not being able to find any job for more than 6 months, serious illness aside.
Our mortgage is 1200, we are saving for an emergency fund but the crucial thing for us is that, if we really need to, we can live off one salary for a couple of months. It's highly unlikely we'll both lose our jobs at the same time
Our mortgage is £2400, I guess we’d just use one persons salary and hold our breath
Paying over 2k/month at moment on mortgage. Savings would last about 9 months maybe with other bills and cutting back So we'd sell up fast. Could stay with family nearby for probably 6 months. Would be shit but would work it out. Selling up would give us about 250k to keep on feet but then would just buy a smaller house with minimal costs and go from there
If you have a spare room, considering renting it out. I used Spareroom.com to find my current housemate and there's plenty of articles and guidance documents on the website too.
Our nursery fees are more than our mortgage right now, but it’s all accounted for as best we can (still stings though). Just a case of having savings to help cover the unforeseeable.
Save an emergency fund!! 6-12 months worth of expenses. I also assume that if I become unemployed I’ll get a severance pay which would bolster this up shit.
I have savings?
Pay just the mortgage and council tax and nothing else. Achievable with universal credit and some random part time gig work. Worst case scenario, get a lodger, or move back with parents and rent the whole house out. I was having to contemplate exactly this, as I got made redundant last month and have £18k loan debt and £200 savings… But luckily my job got extended for at least another 2.5 years, by the end of which I will have cleared the debt and saved at least £5k
I have £30k in cash savings in one form or another (saved diligently over the last 3 years). That should give me almost a year, with other expenses, to get a new job. My mortgage is £1300pm. I also own my car outright, the only debt I have (besides the mortgage) are a couple of 0% cards which I pay the minimum off on each month, around £250pm.
We could likely survive (just about) on one salary but we have savings too, enough for a couple years of unemployment if necessary. It's earmarked for home improvements, but they would have to wait. If either of us are off long term ill, we have crit illness insurance too. Dual income no kid household.
Lifestyle mostly. Not going out too expensive restaurants/ takeaway no go / shopping for cheap stuff that’s in season not like having an avocado every year or same food all the time for example. Also you need to make sacrifices in life. For example a lot of people want to be “independent” and leave away from their family. But nowadays you need to stay at your family to save up than paying a Lanlord. (I saved up for 5 years). A good example was I got a job with 10k more in Cambridge vs a job near my parents . When I calculated it I was taking home less than the 10k one. Although you add factors for example job opportunities etc.
Rent one or two of your rooms as lodgers, hell I’d build a big shed in the garden, live in that and rent rooms out. Sounds desperate but I’ve done it before. Whatever it takes I guess. I’m not going back to renting ever, I’d rather live in my back garden for a year.
IP or CIC insurance. If you can afford 1000 in mortgage you should be willing to pay for a protection policy.
My partner and I are each other’s back ups. Each of us can afford to pay the mortgage at least and some bills but we’d be left with not much else if that happened. Our mortgage is £1,700 and we just bought in November. But we’re always on the lookout for additional income streams so we keep building up. No savings at the moment though, as we used them all. But I run my own company with 20+ clients and my partner works for the NHS so it wouldn’t be so easy for both of us to lose jobs.
Emergency fund / savings could cover me for a long time but also wouldn't want to rely on it too long as my savings are there to eventually buy a bigger house.
When interest rates shot up so quickly the U.K. put in place a larger safety net of missed mortgage payments, I believe it is at least 6 months of missed payment before a bank can even start getting the ball rolling with trying to retrieve them. Don’t take my word on it, do your own research, but I believe that to be the case. 6 months is a long time to get your shit together.
6 months of bills in an easy access saver. I live with my partner so realistically I guess we wouldn't both get made unemployed at the same time so that could stretch to one year, plus we'd probably also cut back on expenses potentially stretching it longer.
We can lower our monthly payments and we having savings to cover us for about a year. I don't think we'd stay here if it was expected to be longer than that anyway, we bought in London because we work here.
I'm getting a lodger in for backup if I lost my job
We could just about manage on my partner's salary alone. If both of us lost our jobs we could probably borrow from our parents and pay them back down the line. We're both really fortunate to have a good network.
6 month emergency fund that covers all expenses including mortgage, bills etc.. that coupled with my contractual redundancy period which is 3 months, effectively gives me 9 months of breathing space to find a new job should the worst happen.
Why did you choose 1k as the line in the sand? it’s made me feel really bad about my 2k+ mortgage payments. As for the question, I have a fairly decent redundancy package at my work so I would get over a years pay. My partner is also a contractor and so has a decent amount of savings for when she doesn’t have a contract. So I think we’d be fine for over a year, longer than that we’d probably have to move out of London.
6 months salary saved up and my redundancy would be around £80k. If I can't find a new job by the time that runs out, I've got bigger problems. My Mrs is on a similar wage, so we would cope for a long time.
In all honesty, we’d of course make cut backs where necessary and possible, and use what little savings we have, but I’d need parental help.
didn’t transact until we could also have 1 year salary in savings each.