Mortgage and childcare

[NameChangeAsICouldBeOverReacting]

We’re currently in the process of selling our place and hopefully moving into a bigger sized property, but we’ve ran into an issue with our mortgage.

At present, we do not pay for childcare as I’m on maternity leave and then they will be looked after by my mum and me taking AL, but we’ve not yet decided (or even signed up to a nursery) if they will go part time once my AL runs out.

The bank is asking for any future outgoings and childcare is one of them. As we’ve said we don’t know if this will change yet they’ve asked for an estimated amount if we did pay for childcare (estimated £700 per month based on daily rates).

This is reducing the amount they would lend us by £100k, meaning we won’t be able to buy the house! Our LTV is 50%, if they offered us the full amount we owe, so we’re in a good financial position on the house.

How is this even fair? We’ve not even decided if we will go through with a nursery place, so how can we be penalised by this when it may not even happen!

It's fair before they have a responsibility to ensure you can afford repayments and if you can't say whether you will need to pay or not in the near future the best thing is to account for it.

And you should be doing that yourselves too. It's stupid to buy a house which you will not comfortably be able to afford the repayments on and especially at the moment with the cost of everything increasing I would be cautious and ensure you had a good buffer.

If you haven't decided that they will go why didn't you say £0? You can't blame the bank if you have a number that will probably be incorrect.

Presumably there’s a high chance you will either pay for nursery, or one of you will cut down on work.

The bank is being responsible in not lending you more than you could repay in these circumstances.

@Brunilde We’re asking for an additional £100k on our current mortgage, which is roughly an extra £500 per month and we’ve budgeted for childcare as well as a bigger mortgage. We have money in savings for this.

Do the maths yourself and if you think it’s affordable just say your mum will be looking after your child for free. I am in process of buying a family home and as my 2yr olds nursery fees are £754 a month (I work 4 days and my mum has her 1 day a week for free) my bank turned us down as we receive a top up of universal credit each month and they couldn’t understand the statement so read it as we get our current rent amount as housing benefit which they can’t accept. So fustrating but just found a man independent broker who found us a lender who was happy with accepting UC.

so if I was you I’d put £0 as childcare and say family help for free or speak to an independent broker and see if they can find you someone who will accept you. So fustrating though as childcare doesn’t last forever but seems to be held against working families trying to buy.

If you know that you can afford CC and the mortgage is it possible to apply elsewhere and adjust your figures, so it doesn't make a difference on the mortgage offer?

It’s just a normal affordability check. You should have said 0.

Can’t you just say zero family will look after child, say you reconsidered

@WomblingTree86 I guess we were being honest and saying we don’t know if it’s happening, but circumstances will change and we may send them two days a week which would be £700 per month.

Ours questioned our childcare costs when we moved. Our broker told them we are moving closer to family to cut the cost of childcare (not true, didn't ask him to say this🙈) but anyway, they were happy with that luckily

Just tell them it's £0 because your mum will be looking after them.

If you’ve done the maths and you are paying out of savings then say 0 and borrow the money. But you can’t then complain a few years down the line if you’ve stretched yourself too thin. The banks have to ask these questions because people weren’t asking themselves, and overstretching themselves then saying the bank was irresponsible

But you can't look at that in isolation. They will look at your incomes and expenditure and have a tolerance for what they feel you can afford. So if the 500 extra for the mortgage plus 700 for childcare means you won't have enough left for other living expenses and unexpected payments they won't accept this. They also have to account for future interest rate rises and cost of living increases.

If you have the money for childcare in savings why not put that towards the house and borrow less if they would be happy with that

If you have savings, then pay a bigger deposit and ask for a smaller mortgage.

Yea, agree. Just tell them you won’t be using it. Or estimate far lower than you’ve done. Childcare that expensive only lasts 2 years, if you get help at 3yo, so don’t let it dictate housing for life!

We spoke to the in laws this weekend and they’ve offered two days a week, so we would be covered, but worried that if we now if we go back and say we’ve found free childcare, then we will be arrested for fraud (mainly joking, I think 😂)

Eek. You should have said 0!

@duvetcovereddissident this really isn’t a humble brag, but our deposit is already 50% of the house cost, but we have kept back some savings as an emergency “oh shit” fund as we’d need to do some work on the house.

Your broker should be able to upload a note saying you have firmed up your arrangements, now that's the actual truth. As a PP says though if they've max loaned you then you might need to apply elsewhere.

Mate. Seriously? Just say £0 and explain why. Done deal. Next time don't be so open and honest 🤣

@DashboardConfessional I'll speak to our broker and see what they say.

This whole process is so stressful and I appreciate that they need to be cautious on how they lend @Brunilde but does feel like working families get penalised in every direction when having children.

The 50% LTV doesnt really make a lot of difference now days. Years ago you could put down a 20% deposit and self certify your income and borrow whatever you wanted ! Oh those were the glory days ……. But many people over borrowed, could not pay and it all came crashing down 😮

In your case go to an independent mortgage broker and let them search the market and as childcare is not yet a definite outgoing - put zero. At 2 you’ll get free childcare for some hours I presume to make it easier in the near future ?

It's not unreasonable of them at all to do this. It's sensible. Imagine how many people get a mortgage and then childcare bills hit and they can't afford it all. Paying mortgage or childcare out of savings also doesn't sound sensible as it suggests you wouldn't be able to afford it as the norm. But you know your finances best.

In the not too distant past a lot of people borrowed more than they could afford and were left with the possibility of losing the house, or actually did. Quite rightly now lenders have to do everything they can to ensure they minimise this risk because as a lot of people of this thread have shown people cannot be trusted to be honest and responsible. You may look at your finances now and think it's affordable but they have to factor in a certain amount of leaway. I know most of us would be happy to tighten our belts a bit whilst the kids are in nursery, we are in exactly that position now, but they have to err on the side of caution. Imagine if you had made the decision to stretch yourself a couple of years ago assuming it would be all right for a few years, but then the world goes to shit and inflation hits 10%. Look at all the threads with people struggling with cost of living at the moment. That is what they have to try to mitigate.

@Lottieoxo we did a lot of budgeting and working out what we could afford with additional mortgage and childcare costs before even starting this whole process with our broker, so I think this is why we’re a bit shocked and annoyed that this is now an issue. Our salaries would cover the new mortgage and childcare and still leave us with money to put into savings each month etc.