Midwife with £320k mortgage

[Clitheroekid]

I was watching Panorama last night, which was about the general housing crisis - https://www.bbc.co.uk/programmes/m001fp6f

Many of the points made about tenants were, I felt, fully justified. One guy was renting what was effectively a cupboard for £800 pcm, needless to say paid for entirely by Housing Benefit. Why the hell the Government can't or won't spend that cash on building decent homes at low rents, instead of liming the pockets of slum landlords, is totally beyond me.

There were also tenants who'd lived in their house for 10 years and brought up a family being evicted on 2 months' notice simply because the landlord wanted to increase the rent to a level they couldn't afford, which is just plain wrong.

But there was another piece about a midwife in London who was apparently being forced to sell her house of 20 years as her mortgage interest rate had increased to the point she couldn't afford it.

Initially I felt mildly sympathetic, if surprised. But that sympathy evaporated fairly quickly when the reporter then casually mentioned that the woman (a single mother) had a mortgage of £320k.

I've racked my brains, but I simply can't understand how a midwife could possibly have borrowed that much. Although I'm long out of date on mortgage multiples it used to be the case that lenders would lend around 3 times salary, and I remember the widespread outrage decades ago when the Skipton said they would lend up to 5 times salary.

But I would expect a midwife in London to be earning around £50k, which would equate to a multiple of around 6.5, and I can't imagine any mainstream lender agreeing to lend that much, particularly with the supposedly stringent affordability tests that lenders now require.

So can anyone offer an explanation as to how she might be in this predicament?

I was also thinking that there's a hell of a difference between being forced to move out because you can't afford your mortgage but with the consolation of several hundred thousand quid in equity, and being forced to move because you can't afford your rent with the consolation of bugger all.

[Lootman]

My eldest son obtained a mortgage of 7 times his income in 2015. This was through a mortgage broker who claimed that ability as her speciality.

He is currently on his second remortaging of that loan and, with the rise in loan rates, he has struggled a bit to replace the loan on the same terms. Although it has helped that he has much more equity now. At least so far he hasn't asked me for (more) help with that.

As for evicting tenants to raise the rent, that is not necessary since rent can be raised without any legal limit at the expiry of an AST. As a long standing landlord I can assure you that the only reason to evict a tenant is either because they are a problem or because the owner desires a change of use for the housing unit.

[DrFfybes]

Initially I felt mildly sympathetic, if surprised. But that sympathy evaporated fairly quickly when the reporter then casually mentioned that the woman (a single mother) had a mortgage of £320k.

I've racked my brains, but I simply can't understand how a midwife could possibly have borrowed that much.

I'm more confused how someone who has lived in a house for 20 years still owes £300k+ on it - how much was it when she bought it?

I can only think it was bought with a partner and she managed to retain and cover the mortgage and come remortgage time the hike from 1.5% to 4.5% (or whatever) is too much for her.

But even at 5%, covering a £15k interest bill on (say) £50k/annum should be doable, just means extending the term or going interest only for a while.

[edit to add - and 20 years ago mortgage interest rates were nearly 8%, so I'm reckoning there has been a fair bit of equity release gone on in the last couple of decades]

Paul

[Lootman]

Initially I felt mildly sympathetic, if surprised. But that sympathy evaporated fairly quickly when the reporter then casually mentioned that the woman (a single mother) had a mortgage of £320k.

I've racked my brains, but I simply can't understand how a midwife could possibly have borrowed that much.

I'm more confused how someone who has lived in a house for 20 years still owes £300k+ on it - how much was it when she bought it?

I can only think it was bought with a partner and she managed to retain and cover the mortgage and come remortgage time the hike from 1.5% to 4.5% (or whatever) is too much for her.

But even at 5%, covering a £15k interest bill on (say) £50k/annum should be doable, just means extending the term or going interest only for a while.

[edit to add - and 20 years ago mortgage interest rates were nearly 8%, so I'm reckoning there has been a fair bit of equity release gone on in the last couple of decades]

During the sub-prime collapse of 2007-2009 many people lost their homes due to foreclosures and repossessions. What always surprised me back then was how many of them were older folks who should have had a lot of equity to protect them, and who should have paid off much of their loan.

Turns out they were using their home equity as a cash machine with successive cash-out refinancings. That can make sense for pensioners, but surely not for people early in their career?

But yes, divorce and such life events can also be a factor. Always marry well.

[tacpot12]

I was watching Panorama last night, which was about the general housing crisis - https://www.bbc.co.uk/programmes/m001fp6f

Many of the points made about tenants were, I felt, fully justified. One guy was renting what was effectively a cupboard for £800 pcm, needless to say paid for entirely by Housing Benefit. Why the hell the Government can't or won't spend that cash on building decent homes at low rents, instead of liming the pockets of slum landlords, is totally beyond me.

....

It's the Conservative's way to try to create more Conservative voters.

If the government spent the cash building decent homes at low rent, the tax payer would still be funding £400 for rent, and would have to build and maintain the housing stock. But this has to be more efficient and better for the tenants. I'm a private landlord myself and would be quite happy to see private landlords outlawed. To give tenants security, it should only be possible to rent your home from a public limited company, a housing association or a local council.

Another issue for the government trying to build decent homes is that homes cost more to build these days because the levels of insulation and ventilation that are needed to be efficient in a world where energy is also also expensive. Also, the training in the construction indutry doesn't equip apprentices to build high quality homes, so re-training and greater supervision (more managers who "do nothing") will be needed.

[BobbyD]

But I would expect a midwife in London to be earning around £50k, which would equate to a multiple of around 6.5, and I can't imagine any mainstream lender agreeing to lend that much, particularly with the supposedly stringent affordability tests that lenders now require.

Bands 8b - 8c midwife salary – progressing to a consultant midwife salary in the UK, places you in bands 8b-8c, which start from £54,764 and £65,664 respectively.

Midwife salary London
Midwives that live and work in central London are entitled to a 20% uplift of their pay, those just outside of London are entitled to a 15% uplift, and those that work in the fringe zone of London are entitled to a 5% boost.

- https://www.reed.com/articles/midwife-b ... y-uk320/80

[DrFfybes]

Bands 8b - 8c midwife salary – progressing to a consultant midwife salary in the UK, places you in bands 8b-8c, which start from £54,764 and £65,664 respectively.

Midwife salary London
Midwives that live and work in central London are entitled to a 20% uplift of their pay, those just outside of London are entitled to a 15% uplift, and those that work in the fringe zone of London are entitled to a 5% boost.

- https://www.reed.com/articles/midwife-b ... y-uk320/80

Hell's teeth - that's less than most train drivers.

[chas49]

Moderator Message:
This is the Mortgages board and the OP raised the question of how someone on a single salary in the range up to approx £50K could have an outstanding mortgage loan of £320K. Discussion of the salary ranges of different professions doesn't really seem to be on-topic here. Can I encourage contributors to bear this in mind (chas49)

[BobbyD]

Moderator Message:
This is the Mortgages board and the OP raised the question of how someone on a single salary in the range up to approx £50K could have an outstanding mortgage loan of £320K. Discussion of the salary ranges of different professions doesn't really seem to be on-topic here. Can I encourage contributors to bear this in mind (chas49)

The relevant point being that their salary estimate of 50k was well below what somebody doing that job in London could be on (£80k), which would allow them to get the bigger mortgage.

[Mike4]

Moderator Message:
This is the Mortgages board and the OP raised the question of how someone on a single salary in the range up to approx £50K could have an outstanding mortgage loan of £320K. Discussion of the salary ranges of different professions doesn't really seem to be on-topic here. Can I encourage contributors to bear this in mind (chas49)

The relevant point being that their salary estimate of 50k was well below what somebody doing that job in London could be on (£80k), which would allow them to get the bigger mortgage.

What's more concerning is that someone on £80k can't service the interest payments on a £320k loan. The interest element would only be about £1200 a month if she was on base rate plus 1.5%, as many were from before the 2008 crash.

Maybe the reporter also casually omitted to mention she has crippling childminding costs to cover too, and the mortgage is a repayment mortgage over a fairly short period. Possibly originally taken out as a joint mortgage and the crisis is result of a relationship breakup and the departed party has since refused to contribute to the mortgage.

Just speculation but might explain the situation she finds herself in.

[Clitheroekid]

What's more concerning is that someone on £80k can't service the interest payments on a £320k loan. The interest element would only be about £1200 a month if she was on base rate plus 1.5%, as many were from before the 2008 crash.

Maybe the reporter also casually omitted to mention she has crippling childminding costs to cover too, and the mortgage is a repayment mortgage over a fairly short period. Possibly originally taken out as a joint mortgage and the crisis is result of a relationship breakup and the departed party has since refused to contribute to the mortgage.

Just speculation but might explain the situation she finds herself in.

I must admit I hadn't realised a midwife might be earning as much as £80k, but if she is then I quite agree - how on earth can someone on that income not afford to service that level of mortgage?

There were no childminding costs at all - the reporter said that she was living in the house with her two adult children.

Perhaps not surprising that my tears resolutely refused to be jerked!

[Mike4]

What's more concerning is that someone on £80k can't service the interest payments on a £320k loan. The interest element would only be about £1200 a month if she was on base rate plus 1.5%, as many were from before the 2008 crash.

Maybe the reporter also casually omitted to mention she has crippling childminding costs to cover too, and the mortgage is a repayment mortgage over a fairly short period. Possibly originally taken out as a joint mortgage and the crisis is result of a relationship breakup and the departed party has since refused to contribute to the mortgage.

Just speculation but might explain the situation she finds herself in.

I must admit I hadn't realised a midwife might be earning as much as £80k, but if she is then I quite agree - how on earth can someone on that income not afford to service that level of mortgage?

There were no childminding costs at all - the reporter said that she was living in the house with her two adult children.

Perhaps not surprising that my tears resolutely refused to be jerked!

WHAT???!!!

A midwife on approaching £80k plus two adults can't collectively service a £320k mortgage? Something doesn't add up here does it?

[Lanark]

WHAT???!!!

A midwife on approaching £80k plus two adults can't collectively service a £320k mortgage? Something doesn't add up here does it?

I think you are missing some context from the deleted post, very very few midwives earn anything above £30K.

This is almost certainly a divorce case which has gone from 5X joint income to 10X single income, probably when the kids turned 18 and the alimony dried up.

[dealtn]

WHAT???!!!

A midwife on approaching £80k plus two adults can't collectively service a £320k mortgage? Something doesn't add up here does it?

I think you are missing some context from the deleted post, very very few midwives earn anything above £30K.

I think you will need to provide some evidence for that statement (it might have been deleted). Midwife basic salaries are likely in the £40-45k region, with additional remuneration benefits (admittedly not always reflected in mortgage offers). A London based midwife likely higher than average, and one old enough to have adult children is likely to have sufficient experience to be on a higher than average pay scale in the NHS.

very very few midwives earn anything above £30K

is an extraordinary claim.

[didds]

appreciating mods requested not to discuss indicudual professions but this thread is about a specific profession etc so Ill plough on. I think this post is relevant to the discussion surrounding financing a 320K mortgage.

This is mostly conjecture I will accept with the lack of definitive info but lets say a midwife with two adult children may have been around long enough to be band 6. Band 7 is a management level but possibly still practising "at the sharp end", whereas 8 and above is management with very little hands on - a band 8+ midwife is a midwife by history not necessarily practise any longer.

So - top of band 6 is £35,572. Add a further 20% for London weighting, and that's £42686.40 pa. A more likely scenario (WADR) than the 80Ks and even 50Ks being suggested. An 80K salary would suggest a band 8c minimum - and I doubt that's a practicing, baby delivering midwife now.

didds

[DrFfybes]

This is almost certainly a divorce case which has gone from 5X joint income to 10X single income, probably when the kids turned 18 and the alimony dried up.

Exactly - as I mentioned earlier, they've lived there nearly 20 years, during which time London house prices have almost tripled. To still owe £320k is not possible unless either...
they were always 'interest only', in which case the house would now be worth circa £1m so I'm not shedding too many tears;
she's regularly remortgaged to support their lifestyle (in which case it is of her own doing);
the partner has departed, she's bought them out, and the interest rate rises combined with loss of child support have tipped her over the edge (in which case there is a slight element of truth in the story).

There is the possibility of the partner being the big earner and having died with no life insurance, leaving her to service the debt, in which case I refer back to my second suggestion.

Paul

[Bubblesofearth]

I've not watched the programme and I shan't bother. These 'news' programmes are a waste of time. Trawl 65 million people for outliers and make a sensationalist story out of them and let viewers extrapolate to the general population. That seems to be what constitutes news stories now.

BoE

[DrFfybes]

Initially I felt mildly sympathetic, if surprised. But that sympathy evaporated fairly quickly when the reporter then casually mentioned that the woman (a single mother) had a mortgage of £320k.

I've racked my brains, but I simply can't understand how a midwife could possibly have borrowed that much.

I'm more confused how someone who has lived in a house for 20 years still owes £300k+ on it - how much was it when she bought it?

Paul

Well this sort of news story is rearing its head again..

https://www.bbc.co.uk/news/uk-england-norfolk-65761233

And again an ill lady who can no longer work is having to sell her home of 25 years as her mortgage is going up fourfold.

Lisa Ward has lived in the same house for 25 years and hoped to stay there for many more. But the mother-of-two has put her three-bed home in Cheshunt, Hertfordshire on the market after her mortgage rate went up by nearly 300%.
Lisa WardImage source, Lisa Ward
Image caption,
Lisa Ward is having to leave Hertfordshire after 25 years because of mortgage costs

The 49-year-old was not able to extend her interest-only mortgage...

"Interest Only" ..."25 years"... One might suggest that when it was dropping from circa 9% to 1% the extra income could have gone off the capital?

Paul

[Lanark]

Bands 8b - 8c midwife salary – progressing to a consultant midwife salary in the UK, places you in bands 8b-8c, which start from £54,764 and £65,664 respectively.

- https://www.reed.com/articles/midwife-b ... y-uk320/80

The full range on that page starts at band 5. midwife £25,655 up to 8c consultant midwife salary topping out at £65,664.

So an average is £45K and I bet there are far more on the lower rungs, if we had the number employed on each band we would probably find a true average around £35-40K + London weighting.

Most likely this is a divorce case and I don't think Alimony payments get increased to match interest payment changes.

[Lootman]

again an ill lady who can no longer work is having to sell her home of 25 years as her mortgage is going up fourfold.

I call BS on this. Most mortgages fully amortise over 25 years.

So this lady must have cashed out = zero sympathy.