Will child care fees stop me getting a Mortgage?
According to The Mirror website today, one in six families who have applied for a mortgage in the last 10 years say they have been turned down or offered a lower amount of money due to child care costs.
Our experience here is that families are not normally turned down for a mortgage for this reason but it is extremely common for a lower mortgage amount to be offered.
It is most noticeable when parents have gone back to work and are paying out for child care costs as these can run into hundreds of pounds per month. These costs are taken into account by Lenders as an outgoing, the same as they would treat a car loan or hire purchase agreement.
Since the Mortgage Market Review of 2014 Mortgage Lenders look far more deeply into committed outgoings whereas before they granted mortgages based on a multiple of gross salary.
Even if there are no nursery fees to pay, parents on lower income still tend to be offered less than their peers without children. The good news though is that the amount this type of family can often be in receipt of tax credits and some Lenders will take these into account as well as child benefit.
Finally, the good news for parents is that there are Lenders out there that take a different approach and don’t treat the nursery costs as an outgoing preferring to rely more on National Office of Statistics data for their Lending calculations and this often leads to a higher maximum mortgage amount.
Malcolm Davidson & The Mortgage Team
Yorkmoneyman.com – Mortgage Advice in York & Surrounding Areas