Fuming about this injustice. Banks are evil.

[yesway]

I am trying to get us a fixed rate mortgage and failing.

The thing that has made smoke come out of my ears this morning is this:

The banks (all of them as far as I can see) now ask to see your childcare costs.

If I apply without including them I am offered a mortgage more than twice as big as if I am honest about them.

Yes I do pay childcare (£2000 a month in fact) and yes that does mean we have less money for other things at the moment.

BUT my children will grow up FFS. I am not committed to paying that much in childcare for the term of the mortgage!

I also want to go interest only for the next 3 years while we have expensive childcare commitments with a view to paying capital repayments afterwards - no bloody way that'd be allowed though.

In fact just to really rub my nose in it, if I gave up my £45000 a year job (which more than covers the childcare) they would be prepared to lend us more!

Don't blame the banks - blame the FSA.

They are bringing in so many strictures re what the banks are allowed to lend and to whom it is making it very difficult for the banks / building societies to lend money at all.

These institutions make money by lending it out - they want to lend to people but if they do it outside of prescribed perameters they get hauled over the coals by the FSA - who can force them to merge.

Well sorry but I think they are being reasonable - they can only assess you on what is going on in your life NOW.

You could conceive another baby tomorrow for all they know - twins, triplets even. Your childcare costs could triple. You could be made redundant along with your husband. You would be furious if they took those "what-ifs" into account, so equally you can't demand that they take your promise to cut down your childcare costs into account when they are assessing your ability to pay the mortgage right now.

However on the practical side of things, do you salary sacrifice and pay using childcare vouchers? Because it you do, you don't have to declare the part of your childcare that is covered by the vouchers since that's already been deducted from your income.

I also find it hard to believe that they would lend you more if you gave up your job -the affordability test is supposed to be about how much cash you have left over after outgoings. If you would have LESS cash left over if you gave up your job and childcare, then that should make the calculation worse, not better. Have you shopped around to make sure this is correct?

besides which I don't think it's unjust to refuse to lend you money based on repayments which they don't believe you afford.

Unjust is pushing high interest loans on people who don't understand the small print and promptly find their houses repossessed. Oh hang on... wait... wasn't that what got the banks into trouble in the first place...?

Not sure why you are fuming to be honest, i've always been asked about outgoings when mortgaging - its standard. They need to ensure you can afford the mortgage and that they are not risking their money.

The bank is asking you to prove that you can afford to pay back the mortgage? Seems sensible to me.

Agree with everyone else. It's not the bank's fault that you're trying to borrow too much. They have a duty of care & a commercial obligation to see that customers don't overextend themselves & have a reasonable chance of keeping up the payments.

Start looking at smaller properties, perhaps?

You have less money because you have childcare costs. The bank needs and is legally required to ensure you have sufficient spare cashflow to meet your mortgage commitment.

If you lie about your financial circumstances in order to secure a bigger mortgage you are breaking the law. Obtaining money by deception is a fraud and if you fell behind with payments the bank would reposess, look into your finances and may seek a crimininal prosecution.

Beenbeta - I have no intention of lying.

Can I make a bit of a defence. When we bought the flat we were both earning more than at present but have deliberately dropped our pay to free up some time while the children are young.
Plus dh now has shares in the firm he works for worth almost the entire mortgage debt and increasing every month.

We both fully expect to increase our salaries in the future - my husband's could quadrouple if he wanted it to and I currently work 24hrs so full time would have proportionally more.

So this is a time in our lives where it seems completely reasonable to be financially stretched but from the bank's point of view they really needn't be as concerned as they are about lending to us. And for them to assume that our current situation is our permanent situation seems terribly unfair to me. (I concede that unjust may have been a bit strong).

"And for them to assume that our current situation is our permanent situation seems terribly unfair to me."

They don't have a crystal ball - how are they supposed to know what will happen in the future? The present situation is all they have to work on - yes your predictions might come true, but equally it might go the other way, you might lose your jobs.

Also your circumstances aren't unusual - most people's salaries go up throughout their careers, most people have high expenses when they start out, most people take a temporary knock when they have kids, this is the norm.

As an aside HOW are you spending 2k a month on childcare when you only work 24 hours?! Are you paying your nanny in gold bullion?

But from your post I take it that you are stuck in your current flat and can't remortgage because of your salaries? I can see that that would be very frustrating/worrying.

On the bright side the SVR probably compares quite well to fixes at the moment, so you could always hang in there and fix when your childcare costs have come down.

and what happens when something unexpected comes up you have a massive morgage and then it will also be the banks fault for lending you to much money if it goes tits up, sorry they are just doing there job.

theyoungvisitor - yes we are trying to remortgage. Our current rate is only 1.99% above base so we're barely paying a thing at the moment - but we would rather pay more and have a fixed rate because we have less flexibility.

As for saying our situation is the norm - well exactly- it is therefore not unreasonable to expect them to factor it into the equation.

Bizaarly -we'd probably have more luck letting our flat out and getting a buy-to-let mortgage and renting for a while as our LTV is

Oh and the nanny is full time. I work round school hours and have four children but I am also trying to run a business from home.

They HAVE factored it in. That's what I'm saying.

Rates are based on this assumption. You're talking as if they should make an exception for you because your circumstances are exceptional.

They're not - they're normal, so you're getting the normal treatment.

I don't get the "you might lose your job argument"

They could be a childless couple earning 100k each a year. They could be given a nice fat mortgage...........but they could still lose their job tomorrow

(although I do agree that the OP is being UR as they do have to look at current outgoings not what may happen in the future and if current outgoings with the childcare included is too high for them to want to lend to you that's just tough.

If you really, really want to fix then you could always reduce your nanny's hours and get a mortgage based on that, then up her hours again after you've got the mortgage.

They are only interested in your current situation as you've found to your cost - but you can use that to your advantage by applying at the most advantageous time.

And yes MaMoTTa I totally agree - losing your job can happen to anyone. I only used that an example to illustrate that the banks have to base their lending decisions on what's happening now, not what might happen in the future. Anything might happen to any of us.

ahhhh - sorry - I get you now

theyoungvisitor - you are a genius and I love you. Our nanny may be leaving in Dec so I could make sure there's a couple of weeks between nannies and apply then.

Oh lord - I wasn't advising you to commit mortgage fraud!

PLEASE don't state anything in bad faith that could come back to bite you later. A very obvious ploy like saying you have no childcare costs based on a two week gap would look awful if it came out later.

Also you usually have to tell them if there are any changes between your application and the approval - so just not having a nanny on the actual day you sign the forms wouldn't be enough.

I wasn't really going to do it.

They'll find out straight away because they ask to see bank statements for 3 months.

phew [wipes brow]

Your bank sounds stricter than ours - when we remortgaged we only had to show one pay slip and one bank statement. The only proviso was it had to be for the same month