We moved during the pandemic boom and borrowed as much as we possibly could to get our forever home.

It’s a five-bedroom house, in a desirable village, with a big garden. Unfortunately, with hindsight we got caught up in the pandemic boom and bought both at the top of the market and when mortgage rates were at rock bottom.

We also underestimated how often we would need to go into the office in future and the difficulty of childcare.

We both work full-time in London and have to commute four days a week each, which is costing about £1,000 between us each month. On top of this we are paying for extra childcare before and after work three days per week.

We earn about £200,000 between us and borrowed £700,000 to buy a £1.2million home, on a three-year fixed rate mortgage at 1.5 per cent, which is about to end.

Our finances are already at breaking point and our mortgage bills will shoot up. What can we do?

Over extended: Our reader is already at breaking point thanks to childcare and commuting costs, but now their mortgage bills are about to shoot up as their fixed rate deal ends

Ed Magnus, of This is Money, replies: You won’t be alone in having this problem. 

Many people re-assessed their living situations during the pandemic and decided to move – often in search of more space and greener pastures.

The pandemic property boom saw average house prices rise by 23 per cent between June 2020 and August 2022.

The desire to move was further fueled by the government’s stamp duty holiday and by the low mortgage rates on offer at the time.

Someone borrowing £700,000 at 1.5 per cent rate with a 25 year repayment term will be paying £2,799 per month. 

Today, the lowest fixed rate deals are just below 4 per cent. A £700,000 mortgage on a 4 per cent rate on a 25 year term would cost £3,693 a month – almost £900 more each month, albeit they should have paid off some of the debt over the past three years.

And while our reader’s mortgage costs are rising thanks to higher interest rates, they also face added pressure from childcare and commuting costs that they may not have fully factored in when they took out the mortgage to buy their dream home.

For expert tips, we spoke to Rachel Geddes, strategic lender relationship director, at Mortgage Advice Bureau and Ravesh Patel, director and senior mortgage consultant at broker Reside Mortgages.

Big mortgages are a big concern right now 

Ravesh Patel replies: This is a common concern right now. Many people made big decisions during the pandemic when borrowing was cheap and flexible working felt permanent. 

The reality has shifted for a lot of households since then, and the combination of rising rates, commuting costs and childcare is hitting hard.

The positive here is that you still have plenty of options. With around 42 per cent equity in your home and a good joint income, you’re not in negative equity and you’re likely to be eligible for a decent range of mortgage products, even in today’s market.

The most important thing is to act now, before your current fixed rate expires and below are few strategies worth exploring.

It might feel overwhelming, but you’re not without choices and certainly not stuck. We work with families in similar positions all the time, helping them restructure things to stay in the home they’ve worked so hard for. 

With the right advice and a bit of forward planning, there’s usually a manageable path through. 

Ravesh Patel , director and senior mortgage consultant at broker Reside Mortgages

What can over-extended borrowers do? 

Ravesh Patel replies: First, look at the mortgage term. Extending it to 30 or 35 years (subject to your age) can bring your monthly payments down significantly. 

Yes, it means more interest in the long run, but it gives you flexibility when you need it most — and you can always look to reduce the term or overpay later.

Second, some lenders will consider interest-only or part-and-part options, especially for borrowers with strong income and equity. It’s not a forever fix, but it can ease pressure over the next few years.

Third, avoid the temptation to just stick with your current lender. While a product transfer might be quick, it’s rarely the most competitive route. 

A whole-of-market broker can explore deals that better suit your circumstances, including cashback offers or products with lower upfront costs.

Fourth, Explore offset mortgages, whilst these types of mortgage are not widely available, If you have savings, even modest amounts, these products allow you to reduce interest charged and retain access to funds.

And finally, it’s worth having a proper look at your overall budget. Even a small shift in working patterns or childcare arrangements could free up extra cash each month.

Rachel Geddes replies: The first – and by far the most important – thing to do in this instance is to speak to a mortgage broker. 

They will complete a full fact find, and provide bespoke advice based on your individual situation. Below are some of the options that may be on the table:

Securing affordability with a new lender is certainly possible, and a broker can review all available remortgage options outside of your current deal. 

You might even consider extending your mortgage term whilst the additional childcare is needed. 

Once this period has passed, you could look to overpay – depending on your lender’s criteria. 

Your broker would also discuss whether selling or downsizing is a feasible option, what that would look like, and what would need to be considered if this was a route you went down.

It’s worth looking at the bigger picture when taking current mortgage market conditions into account. 

While interest rates have seen significant increases from their historic lows, the situation isn’t as dire as some headlines might suggest.

Rachel Geddes , strategic lender relationship director, at Mortgage Advice Bureau

What sort of mortgage deals are available? 

Ed Magnus replies: If the property is still worth £1.2million, then our reader could be eligible for the lowest rates.

The lowest fix on the market for those remortgaging is currently a three-year fix being offered by MPowered Mortgages at 3.82 per cent with a £1,058 fee.

On a £700,000 mortgage being repaid over 25 years that would cost £3,627 a month.

NatWest is also offering a two-year fixed rate remortgage deal at 3.92 per cent with a £1,554 fee while Nationwide Building Society is offering a 3.97 per cent deal with £808 of fees.

In terms of a five-year fix, NatWest is offering a 3.95 per cent deal with a £1,554 fee, HSBC is charging 3.99 per cent with a £1,088 fee and First direct has a 3.99 per cent deal with a £490 fee.

Rachel Geddes adds: Markets have been quick to price in future rate cuts, and consequently, it’s great to see so many mortgages now priced below 4 per cent. 

We have real wage growth, lower mortgage rates, and a favourable rate outlook, plus a record high number of mortgage products overall.

This increased competition among lenders is a significant benefit to borrowers, as it often translates into more competitive rates and flexible product features. 

With that in mind, based on the last few years, it does now feel like it’s a better time to refinance than it has been for quite some time.