Does having DC massively effect mortgage?

[maa32]

Hi,

I was 25, newly married and DC-less when we bought our house, small terraced house. We bought within our means with the intention of starting a family. We moved quickly due to starting IVF and quite frankly, I was desperate to secure a house (in hindsight I wish I waited it out and bought a bigger house)

Well, fast forward 3 years and we have two children and oh my god there is no space.

We've saved enough to move, we will have equity and the value has gone up. I'm a student, but once qualified should be earning around 24k, not amazing but slightly more than when I bought this house. DH is on a decent wage, and it's about 8k more per year than when we bought this house.

Will the fact we have two babies effect the chances of securing a mortgage? We have saved a lot, we have secure jobs (mine is lined up pending my degree qualification)

Is there anything I need to prepare for or start to work on? Credit scores are both still good

Childcare costs will be what reduces the amount you can borrow. Especially with two children!

I thought that. Thankfully we have family support, kids are 2 and 4mth.

It would end up being around £600 per month childcare

Would we be best holding off until 1 DC starts school?

As well as deducting childcare costs, they also expect you to have a larger quantum of free cash post all financial obligations than someone with no dependents

So yes this does make a mortgage harder to get, or should I say more likely at a lower quantum. Perhaps reconsider your area?

Not all lenders take childcare costs into consideration - we spoke with the independent mortgage advice people and she found us a lender who didn’t include them which made a big difference to how much we could borrow - can’t remember who it was with now (NatWest or nationwide i think) as we’ve since remortgaged but I would suggest getting help from someone in the know as they’ve always got us amazing deals that we would never have been able to source on our own.

Yes having dependents can affect how much you can borrow and things like childcare costs will be factored into affordability, NatWest used to ignore childcare costs, not sure if they still do. You should be able to play around with some online calculators to give you an idea of how much they're comfortable for you to borrow. We bought our house after having kids so it doesn't stop you entirely! It'll just restrict borrowing amounts as children obviously affect how much we can afford.

It's obviously going to affect affordability as you will need to buy more food and clothes for a start, don't forget your utility bills and council tax are likely to cost more in a larger house.

Depending on the exact numbers, it's not necessarily going to stop you from moving, but it obviously is going to have an impact on the amount you can borrow. Best thing to do is to have a play with some online affordability calculators, and possibly talk to a broker, especially if it looks like you're a borderline case, as they'll know which lenders might be more accommodating.

Other thing to do is review your expenditure to make sure you're not wasting money anywhere and all your bills are as low as possible.

Surely the fact that you've got a house and mortgage already goes massively in your favour. And if you're both working? Surely you are ideal candidates for a mortgage or have bank criteria changed massively in recent years?

I don't remember ever being asked about childcare costs and I was a single parent.

I would still be buying within our means, regular working class area just a house with a garden rather than our terrace with yard

I'm currently with NatWest so will speak with them for further advice

It didn't really affect us, we still managed to borrow 4.5x our salaries with 1 child, i would recommend using a broker as all banks are different and they'll know which ones don't deduct as much for kids etc

Are you working now or not? They won't take future earnings into account of you are a full time student, I think that's the biggy TBH.

When will you start work? They will need to see proof of this.

@NeilBuchananisBanksy we wouldn't be looking to move for another 2 years. I'll be qualified soon and then can start the job that I have lined up, I'll have probably been employed around a year by the time we will be selling

(Sorry I should've included that in OP, I'm a full time student but will be employed at the time we're looking to buy a new house)

It will affect your borrowing power but you have savings, equity and an increased income. Why not approach a broker (London & County are free) to see how much your budget is?