Do childcare costs affect mortgage application?

[coffeeforone]

If we currently have childcare costs of £2000 pcm, would that affect how much we can borrow? They should reduce over the next few years and assuming we can also afford the mortgage payments, but would it affect the total amount we can borrow as long as we can still (just about) afford the monthly repayments on say a £500k mortgage (for example).

I know you have to declare it so I would imagine so. It definitely factored into our loan application.

Yes.

Ours are so high but know they will end in a few years but wanted out forever home. We told the mortgage broker that when we move, our family will be helping out and they left it off!

Yes they do as part of the affordability checks.

Thanks! It's annoying as they are just a short term thing for a couple of years. The mortgage will be like 30 years!

We had this when we applied (via video link skype whatsit!) and we made up a ball-park figure on the spot which they accepted and they never asked for proof

Yes it does massively. I work in the sector and once you have young children/ childcare costs and in a lot of cases a reduced part time income the amount you can borrow reduces dramatically. As they cannot take income that you can’t prove - they do the affordability on your current circumstances as from their perspective, it would still be deemed unaffordable at that point in time.

It’s one of the reasons we will have to wait till DD is 3 to get our big house.

Yes they ask your outgoings

This is why I only have one child! Wouldn't have been able to borrow enough with two.

I'd recommend getting a mortgage broker. They really are worth using.

They ask but they don’t check. Our broker advised us to lie as they were only for the next year. We also paid by cheque termite which he said was easier to explain away as one off payments for something else.... might be different if you pay monthly be direct debit or similar.

It’s not exactly ethical but our broker was sure it made the difference.

Termly rather than termite. Obviously.

I wouldn’t advise lying. After all it is committing fraud and puts you in breach of the terms and conditions. It isn’t worth the risk in my opinion.

Jesus wept I can’t believe brokers get away with this! I’d be sacked and struck off if I encouraged my customers to lie.

But yes they are taken into account and the lender will check bank statements and/or payslips (if childcare vouchers salary sacrifice)

Even if they are only for the next couple of years (most are) you still have to pay your mortgage in that time.

Jesus wept I can’t believe brokers get away with this! I’d be sacked and struck off if I encouraged my customers to lie.

I know this surprises me too. I work for a mainstream lender and we are very regulated. I would be put off a broker if they encouraged me to lie, I don’t think I could trust them- obviously just wanting their commission.

When we did our mortgage we had to put all of our expenses down.

Don't you have to give bank statements and payslips do surely they can check your outgoings etc??

Some lenders don't need bank statements but brokers generally look through them for due diligence and to check for recurring payments etc. Halifax don't ask for bank statements AFAIK. They didn't when we applied anyway.

They might not ask for them initially but if there are any discrepancies on your application (ie you both work full time and have 3 kids under 5 but no childcare costs) then they may request them later down the line.
Even after the mortgage has been offered, it can still be withdrawn if fraud is suspected.

For all those saying they ask but don’t check as far as I remember they take 3 months bank statements surely the £1500+ to x nursery (assuming some payment may get there via tax free childcare/vouchers so will not be seen on bank statements) would give the game away?!

Yes it will affect how much you can borrow, it can reduce it by quite a lot. If you use tax free childcare, then if you can afford it, top it up with a large amount of money now. Then for the 3+ months that you need to provide bank statements for, pay a smaller amount into the tax free childcare e.g. 1k per month. The mortgage company will only look at what's going out on your bank statements, not how much you're actually paying the nursery. That's what a lot of people do to get around it. Of course, you need to be happy that you'll actually be able to make the mortgage repayments.

The mortgage company is only looking at a 3 month snapshot in time to make their assessment which isn't perfect because your childcare costs could double immediately after you get your mortgage approved and that would never be taken into account.

Yes and they do check them against the bank statements

Yes, all regular payments affect it.
My ds is a broker, he told me