After a lovely relaxing holiday in August, I was brought back down to earth and reality not by my brimming work inbox but by an email from my current mortgage provider, reminding me that my fixed rate mortgage deal was due to expire and to consider their current mortgage product offers. If I did nothing, I would automatically revert to their standard variable rate of 8.4%, so doing nothing was definitely not an option!
Their deals were not pretty – they were all variable apart from one 2-year fix that was offered at 6.4%.
Whilst I’d been preparing myself for a big jump in interest rate (from the now almost mythical 1.25% I’m currently paying) by playing around with mortgage calculators, checking affordability and such like, it was jarring to seeing the numbers in black and white. I see now that I’d been somewhat optimistic with my calculations and wishful thinking about interest rates dropping. Or that getting my LTV down would actually make any real difference.
I contacted an independent mortgage adviser, one recommended by a friend who had just recently herself remortgaged.
Unfortunately, the best 2-year fixed rate deal would have resulted in me paying nearly an extra £300 per month for my mortgage (a 55% increase!) so I had no alternative but to look again at my current provider’s offers, where at least there would be no arrangement fee, nor would I have to provide all my financial info again.
Their best offer would increase my mortgage by £240 a month (a ‘mere’ 44% increase), a 2-year 5.30% variable rate. With the rate being variable, this might go up, so I could end up paying that extra £300 (or more), but there’s also a chance that this extra could decrease a little, if/when the interest rates fall. I’m more inclined to think (and will take the gamble) that they will likely drop, though by very little and certainly not in the short term. I reckon in my lifetime, <2% mortgage rates will be consigned to history, we’ll look back and think of ‘the good old days of borrowing’! At least we’re not back to the double-digit rates that my parents were paying for their mortgage.
I still have a month to go so I haven’t signed up to anything yet, but not sure I want to leave it too late in case even that offer I’m considering is withdrawn.
How will this affect me?
Despite shouldering all financial burdens on my own, I’m in a fortunate position in that this not-insignificant (to me) increase to my monthly mortgage payments still isn’t going to result in my struggling to keep up with payments, getting into arrears, having to choose between heating or eating, resorting to food banks or pay day loans.
But it’s enough that it’s probably going to have some impact on my every day lifestyle; how much I’m able to put aside for my social life, holiday funds, house repairs, emergency funds, overpaying the mortgage.
Ultimately, how will my increased mortgage payments affect my ability to continue adding to my FIRE savings/investments and advance towards my goal (shifting goalposts notwithstanding)?
I’d like to think that I’m quite mentally resilient, of stoic-ish nature but I can’t deny that increasing costs in pretty much everything have been causing me a bit of worry, about my plans, about the life I lead.
For the first time in a long time, since my debt paying days, I’m considering running a proper budget, tracking all my spending to the penny.
It’s not a task I relish, in fact, it fills me with dread and I could almost sense a small cloud of doom and gloom coalescing above me.
Bills, Bills, Bills
I have some unavoidable and quite significant expenses looming on the horizon, costs that I can’t really put off much longer or ignore.
In no particular order of urgency (since they all need sorting out):
1 – Dental costs – that private dental referral from March has finally come through and they called me to make an appointment. I’m no longer in pain but still can’t really eat on that side of my mouth. £99 paid in advance just to see the consultant and then, he will diagnose whether I need root canal treatment or extraction. Cost estimated to be around £1-£1.3k.
2 – New Glasses – my prescription has changed these past couple of years, so I need to get new glasses to avoid eye strain and headaches. Cost estimated around £350-£450.
3 – Car repairs – the advisory issues flagged up in my MOT need to be sorted as I don’t want them to balloon into reasons for my MOT to fail (and for safety reasons, as one of the issues was to do with my brakes). My air con isn’t working but I’m deeming that an unnecessary nice-to-have right now. Cost of repairs quoted at £700. I also have a slow puncture. Every week or so, I need to check the tyre pressure and pump up the tyre. That will cost another £100-140.
That cloud of doom and gloom continues to spread over me…
The other week, I got a last minute “quick catch up” meeting invitation from one of the big bosses in the US, my ‘interim boss’ since my previous boss had left at the end of July. I thought (with some relief) that the meeting was probably going to be news that his replacement had been found.
Only it wasn’t that – I was being given an unexpected pay rise.
I had already received a performance-related pay increase earlier this year, so I was rather speechless to get this extra increase on top!
The reason? A ‘reward for continued excellent services’. Okaaaaay…
Well I didn’t want to question it so just mumbled, “Wow thanks!!”
My mind was reeling (in a positive way), however at the same time, my chimp brain couldn’t help but negatively wonder what this actually meant. Did it mean that they weren’t going to replace my boss and that I was going to be given extra duties? Was something else on the horizon that would affect my workload and this was a sweetener to keep me happy?
Anyway, two days later, I was notified that my new boss had just accepted the job offer and would be starting in a couple of months – hurray!
Four days later however, I found myself part of a new project team, to help with the integration of a recent company acquisition. Looking at the project plan, I have been assigned a lot of tasks so my workload will go through the roof.
Is it bad that pay rise or no, I would have still signed up for the extra project tasks because that’s just the kind of ‘worker bee’ I am? More fool me, perhaps.
I’m really grateful for this extra pay, which won’t quite cover the entire monthly mortgage increase but will give me a lot more breathing space, makes things more manageable and me less stressed about it.
Annoying that in more ‘lower interest/lower inflation’ times, I would just be throwing the extra into my ISA or SIPP and not succumb to lifestyle inflation but I don’t have a lot of choice right now.
So in answer to the title question of this post, “Is the dream [of FIRE] dead?”, I’d probably say “Pas encore!“.
Onwards and upwards as always!
[Note, for those interested, I am still learning French via Duolingo! 431 days and counting!]