Ending a Tesla Lease early

[Stranger Dings]

I’m not a financial advisor, but here are my thoughts…

When it comes to renewal for the mortgage, you could look to extend the mortgage term by another five or ten years. This will reduce your monthly payments, but will increase the cost of the mortgage interest across the years. When you are financially back on your feet, go back to paying the old amount or if you can, even a little more. This will give you flexibility in the future, should something similar happen again. Be sure to chose a mortgage that allows a degree of overpayment and be very careful to avoid using your lower payments as an opportunity to spend on unnecessary things.

When it finally comes to the end of the Tesla lease, make sure that you choose a new car that you can sensibly afford. There’s no reason to suspect interest rates have peaked, so be very careful not to get caught again in future.

Good luck. Times are difficult for a lot of people right now and I hope you get through this challenging time

 

[Staypuffman]

Maybe so. But 1+1 = 2 is a pretty undeniable statement.

When house payment + car payment + other expenses = monthly income, it's not too had to understand that if ANY of these increase, then you are in trouble.
AND, if you went for an adjustable rate mortgage, the probabilities of it increasing is pretty high. (especially when bought during exceptionally low rates)

As my wife and I were buying our house 2 years ago, we were laughing at the companies pushing adjustable rate mortgages. They didn't make any sense. It is really naive to think that the interest rates would never increase over 30 years.

Of course the other side of the coin is buying a new and/or expensive car when that money SHOULD have been going to savings.

I'm pretty sure that my math applies to both sides of the pond. Adjustable rate mortgages are going up over here as well. Home prices are increasing. Salaries are not increasing to keep up. Rents are going too high, too quick.


Living outside your means is common to many countries.

When a mortgage payment goes up by 40% I'd say that is hardly "living outside your means".

Again you don't understand but why am I surprised.

 

[Staypuffman]

I’m not a financial advisor, but here are my thoughts…

When it comes to renewal for the mortgage, you could look to extend the mortgage term by another five or ten years. This will reduce your monthly payments, but will increase the cost of the mortgage interest across the years. When you are financially back on your feet, go back to paying the old amount or if you can, even a little more. This will give you flexibility in the future, should something similar happen again. Be sure to chose a mortgage that allows a degree of overpayment and be very careful to avoid using your lower payments as an opportunity to spend on unnecessary things.

When it finally comes to the end of the Tesla lease, make sure that you choose a new car that you can sensibly afford. There’s no reason to suspect interest rates have peaked, so be very careful not to get caught again in future.

Good luck. Times are difficult for a lot of people right now and I hope you get through this challenging time

Thanks.
Our mortgage term is already quite long but will have a look.

Was also looking at going interest only as well for 2 years.

 

[GRiLLA]

Maybe so. But 1+1 = 2 is a pretty undeniable statement.

When house payment + car payment + other expenses = monthly income, it's not too had to understand that if ANY of these increase, then you are in trouble.
AND, if you went for an adjustable rate mortgage, the probabilities of it increasing is pretty high. (especially when bought during exceptionally low rates)

As my wife and I were buying our house 2 years ago, we were laughing at the companies pushing adjustable rate mortgages. They didn't make any sense. It is really naive to think that the interest rates would never increase over 30 years.

Of course the other side of the coin is buying a new and/or expensive car when that money SHOULD have been going to savings.

I'm pretty sure that my math applies to both sides of the pond. Adjustable rate mortgages are going up over here as well. Home prices are increasing. Salaries are not increasing to keep up. Rents are going too high, too quick.


Living outside your means is common to many countries.

I would suggest that the in the UK isn't really all that similar to the US, so your opinions aren't perhaps coming across as valuable, and are also not at all helpful.

Fixed rates for 30 years on a mortgage simply aren't available here, they last 3-5 years and then either become variable rates or you take out a new fixed. There may be a few exceptions up to 10 years, but these are likely only available to people in specific situations. If you lived in the UK you and your wife would be facing a likely more than doubling of mortgage payment, a margin by which I imagine your 'maths' would struggle.

I don't have anything more to offer to the OP in terms of advice, other than to acknowledge it's wise to be making plans as far ahead as possible.

 

[WannabeOwner]

... or you take out a new fixed

And usually have to pay all the Admin costs all-over-again, so Fixed has an inbuilt additional cost of 20% of admin cost each year ... typical UK-service-industry stitch-up, like standing-charge on utility bills and so on. Companies with a free-spinning moral compass

 

[Mrklaw]

you can get lifetime fixed but they're usually a good couple of percent higher than short fixes so nobody goes for them. The £1000 cost of bouncing between 2 year fixes is just normalised in this country now

 

[ACarneiro]

you can get lifetime fixed but they're usually a good couple of percent higher than short fixes so nobody goes for them. The £1000 cost of bouncing between 2 year fixes is just normalised in this country now

Really? I don’t think I’ve ever seen a lifetime fixed mortgage?

 

[Zilla91]

Me neither. I would have jumped at that if I knew they existed when I fixed last year as I had a strong gut feeling this was going to happen. I suppose I should be grateful I fixed for 5 years at 1.5% but I'm wary of that cliff edge once that comes to an end

 

[The_Cable_Guy]

I feel very sorry for people whom bought in or just before covid when housing prices were pumped very high, overstretched on a low APR on a 2-3yrs deal and now this.....obvioulsy housing prices doesnt matter if you staying put long term, but it does effect you on your LTV thresholds, and also like OP has said, making changes now to try and eleveate that

Jumping from a 1-2% 200k morage to a 5-6% is heavy on a the month repayments

£800 repayment on 1.5% over 25 years
£1,289 on a 6%

obviously its not 25 years as you ride it out for 2-3 years and hope the market has settled, but i cant see it goes back to anywere near what it was a year or so ago.

but, and i know this is subjective, but 200k i would say isnt a large morgage, imagine 2 or 3 times that.

 

[Mrklaw]

a 200k mortgage taken out at 2% would be about £850pm. at 6% more like £1250. Big increase but not '£1000 pm increase' like some headlines. If you switched to interest only if thats available as an option, it'd be about £1000 a month and arguably a good choice if you're not able to meet the full jump on repayment.

 

[GRiLLA]

Most things called Lifetime fixed are equity release schemes for people of pension age.

I had a Lifetime Tracker rate about 20 years ago as I was sick of rearranging fixed every few years, turned out to be a very good deal as when the rates were low we could overpay and finish early. Things are far more difficult these days given how low rates drove house price rises far in excess of wage growth. We really should stop messing with the rates to prop up other inadequacies in the economy.

 

[The_Cable_Guy]

5% BOE now.

 

[C225]

I actually contemplated ending my lease early after the Truss mini budget last year as my Mortgage is due for renewal november this year, would've cost me about £8k to end early so never did.

Thankfully rates settled down a bit and I managed to get a product transfer a few weeks back when I hit the 6 months before the deal ended but even then they were on the increase again. I'm going from a 2.01% to a 4.24% and the increase is about £200 a month. I can absorb that just next years holidays are getting severely cut back but compared to some I'm not in a bad situation.

 

[yessuz]

a 200k mortgage taken out at 2% would be about £850pm. at 6% more like £1250. Big increase but not '£1000 pm increase' like some headlines. If you switched to interest only if thats available as an option, it'd be about £1000 a month and arguably a good choice if you're not able to meet the full jump on repayment.

well, if you are in SE, then the average 3 bet house semi is ~600k ) then your increase from 2% to 6% would be in region of 1k pm

 

[Mrklaw]

well, if you are in SE, then the average 3 bet house semi is ~600k ) then your increase from 2% to 6% would be in region of 1k pm

but then you’re in the region of what - 400k + mortgages? Who even qualifies for one of those? The very idea scares the crap out of me!

 

[yessuz]

I actually contemplated ending my lease early after the Truss mini budget last year as my Mortgage is due for renewal november this year, would've cost me about £8k to end early so never did.

Thankfully rates settled down a bit and I managed to get a product transfer a few weeks back when I hit the 6 months before the deal ended but even then they were on the increase again. I'm going from a 2.01% to a 4.24% and the increase is about £200 a month. I can absorb that just next years holidays are getting severely cut back but compared to some I'm not in a bad situation.

I re-arranged my product change at the longest time before current deal was running out (I am with Santander - it was 4 months) - to managed to get 3.59 for 5 years (increased from 2.5) which resulted in +100 a month.

What my view of the situation is - we are currently in ~2006-2007. Inflation and housing is going up, rates as well. they will stop at 5 or maybe 5.5% this time. similarly to what it was in 2007/2008 - all the housing market will be on on halt completely. this will result in a lot defaults and maybe some bank will require bailout (who knows).

After 1 year or so, in order to restart the housing market, some lending will start to go down... in the end, after 4 years from now it will be back to 2.5-2% BOE rate (or maybe even less). Rinse repeat.


I HOPE

 

[yessuz]

but then you’re in the region of what - 400k + mortgages? Who even qualifies for one of those? The very idea scares the crap out of me!

well exactly.
I think a lot of the mortgages there should be either very old ones (low LTV) or interest only.

look at London - cheapest 3 bed semi price in some place like Twickenham is like 550k (and it requires full renovation). who can afford it to pay 2.6k a month at 81% LTV?! well, many could, I think, but the quality of life is... aghm.. and being at that income level I would expect your own expectations for the property are a bit different than a run down damp smelling 3 bed semi.

so in such case you take interest only mortgage, pay 1.6k a month and fingers crossed.

 

[ewoodrick]

I would suggest that the in the UK isn't really all that similar to the US, so your opinions aren't perhaps coming across as valuable, and are also not at all helpful.

Fixed rates for 30 years on a mortgage simply aren't available here, they last 3-5 years and then either become variable rates or you take out a new fixed. There may be a few exceptions up to 10 years, but these are likely only available to people in specific situations. If you lived in the UK you and your wife would be facing a likely more than doubling of mortgage payment, a margin by which I imagine your 'maths' would struggle.

I don't have anything more to offer to the OP in terms of advice, other than to acknowledge it's wise to be making plans as far ahead as possible.

Yes, you are correct, it's a completely foreign concept to me, not having fixed rate mortgages.

Someone over there needs to start something to get them for you. You are being swindled by the banks and/or government.

 

[EVMeister]

You are being swindled by the banks and/or government.

Yeah, we're used to it.

 

[ACarneiro]

Yes, you are correct, it's a completely foreign concept to me, not having fixed rate mortgages.

Someone over there needs to start something to get them for you. You are being swindled by the banks and/or government.

Don’t see what government has to do with what financial products the banks make available (other than putting regulatory constraints on obviously quasi-fraudulent ones).
I don’t think fixed rate mortgages are “a thing” anywhere in Europe, tbh. Seems pretty risk for banks to offer such a product?