Absolutely terrified of childcare costs. Is this a decent alternative or am I making a deal with the devil?

[greenPandas]

Recently had my ds and have been looking into the price of childcare in London. I realised that I would have to fork out roughly £1000 a month to have him in nursery full-time while I work.

Definitely cannot afford to do this. But I really cannot afford to take time off work either. I have few people gunning for my job and being constantly absent would give management the opportunity to put me on the backbench.

I spoke to a friend who told me about a new company that covers your child care for the year and spreads the cost. You pay them back over a longer period of time. I contacted them and found out that I could pay £200 pounds a month over 3 years rather than the £900 (think of it like car financing).

It would help massively because it means an extra £700 with every pay check. But I am a little nervous, because it is essentially a loan.

Although I do need help with childcare, I'm not too sure if financing is the best option. It's a relatively new company and haven't met many people who have used them.

What do you guys think? What would you do if you were in my shoes? Should I go for it, or just bear the costs.

What is the interest rate?

You'll need at least 3 years of childcare per child, so either you'll be paying for 9 years for one child (not including paying for after school and holiday care) or you'll be paying full fees in year two plus the payments you owe from year 1...

18 years of payments if you have 2 children 3 years apart...

How does it work? I’m not sure I understand?

You pay them £200 per month and they pay the nursery £900 per month ?

I guess it's basically a loan or credit agreement. But presumably you will need three years or so of childcare, so you'll be paying for a long time?

Also might you just be better off actually getting a loan instead? Have you checked the terms and APR and how much you would pay with a decent loan? Have a look on MoneySavingExpert.

What about a childminder?

Are you paying childcare alone or do you have a partner sharing the cost?

Do you rent or have a mortgage?

£200 a month over three years = £7,200. for the first year of care.

Given that you think cost of care will be £12,000 for the year, something doesn't add up.

And that's before you get to needing a second year of childcare.

Would an Au Pair be an option? I had them growing up and loved them. Obviously you have to house and feed them but its much cheaper than nursery. If I had the space i would most definitely consider it

Au-pairs do not do full time childcare!!! That would be a nanny...

That sounds like a loan and not a route I would take. Childminders are sometimes cheaper so have you explored that? You can go for the tax free childcare scheme which will see your nursery payments boosted by 20% or maybe your employer does childcare vouchers. Can you adjust your budget in other areas.

Did you not consider this before having a baby? How have you coped on maternity leave with a reduced income? It seems a lot but you will get 30 free hours when he is 3. I recommend you wait to have a 2nd.

Yes, they pay the nursery upfront and I pay them the money back over time.

How much do you think I would have to pay for an au pair? Am I also responsible for their upkeep?

You cannot use an au pair for full time childcare.

Have you factored in the 20% for the new childcare vouchers scheme?

What is the APR on the loan?

It strikes me as a dreadful idea.

@whatisheupto I'll probably cover the costs alone. Might have some minor contributions from family, but will bear most of it

@MrsMaiselsMuff around 3.4 percent.

Why do you see childcare as a cost you have to bear on your own? It should be split between both parents if both are working.

The loan sounds like a terrible idea, trapping you into a finance agreement for years after you've had the benefit. It would affect your credit rating and mortgage affordability too.

Is there an option for going part time? And/or doing a childcare swap with friends? I used to do that with an NCT friend when my first was little; we'd each look after both littlies for one day a week, and we also paid for 2 days with a childminder, meaning we were covered for 3 days. My partner and I each worked a 4 day week and looked after her one day each, and our childcare costs were relatively low.

What will you do after the first year?

Does this include the government 20%?

@meow1989 Yes, I have included the government's 20%. But I live and work near central London, so the prices here are atrocious.

@reefedsail

Not to sure to be honest... If I were to take the loan for the first year, I was hoping the extra money saved via working would be more than enough to pay for the next year. The issue is that my ds wasn't really planned, so I didn't have enough time to put some money in the kitty.

I'm fairly new to all this. Am I being naive, here?

£900 per month is very cheap for a London nursery fulltime baby place - even allowing for the 20% government contribution. The maths as you described do not add up and I find it hard to believe anyone would offer this kind of high risk unsecured loan for 3.4% return. All sounds dubious to me.

If you work for a large enough employer can you access a workplace loan?