babies & the mortgage...

[Floopy21]

Hi All,

Does anyone know how you work out what help you would be entitled to when you have babies? We would like to start TTC, but need to work out if we could afford the mortgage, etc first! My employer would pay the minimum he could get away with in terms of Maternity leave. Do you think a trip to the CAB would be the best/most accurate bet?

TIA!

If you joint salary is over £25k, then you'll get basic tax credits of £40 a month (extra £50 baby element a month until age 1) and £80 child benefit a month.

If under £25k, then tax credits will increase and there is a calculator on the tax credits website.

do you both work full time? Do you need both incomes to sustain your living costs, mortgage, bills etc?
For a few months, try using just your dh/dp's wages to cover things and set your own aside for savings and see how you manage, That will give you a good idea of what the shortfall is and how much you need to cover the basics.
You'll get the tax credits and child benefit IR will be able to tell you more accurate info relating to your own personal income.

Go to www.entitledto.co.uk they'll calculate what you're entitled to/likely to get.

I would strongly advise putting away as much of your salary as possible when you start TTC in a savings account and trying to live off your DH's salary along.

Then you have a nice nest egg for buying baby essentials and to supplement your income when you're off on maternity leave.

It also gives you a really good idea if you can actually live off one salary and makes you think seriously about what you spend.

You can spend far more than you need to when you have a baby (you're targeted from even before you conceive by so many companies) but there are loads of good tips for avoiding that on the pregnancy threads. You can also save loads of money (less swanky nights out, no pointless purchases of clothes, no booze!) if you put your mind to it.

along? alone

Thanks very much everyone, and so quick! I know we couldn't live on DH's salary alone, so I shall have to do some serious saving before TTC. Does anyone know how much statutory maternity pay is? Sorry, one more Q!...do you know if it's easy to change your mortgage from a repayment to an interest only? I guess it will probably depend completely on the company (ours is Abbey). Thanks very much for your help, trying to get myself as prepared as possible.

Risky to change to interest only. I would check whether they allow you to take a payment holiday of one or more months and do that instead, then try and manage as best you can. If you have been with them for over 6 months / a year you are probably eligible. The other option would be to look at good remortgage deals. The moneysavingexpert site might help.

Google and you'll get what SMP is now. I can't remember. Does your employer not offer anything more?

Actually as it happens I know quite a lot about Abbey... my mortgage is with them and I used to be a branch manager for them. Back in the day...

It is easy to change from repayment to interest only. Phone them up to do it. The branch will only stick you on the phone any way. There is a fee to change - I think it's £75 but could be more like £100 now. Possibly more as it's easy money for them.

Statutory maternity pay is easy to find out. Have a look here for full details.

Currently it's...

90 per cent of your average gross weekly earnings with no upper limit for first 6 weeks
Then the remaining 33 weeks at the lower of either the standard rate of £123.06, or 90 per cent of your average gross weekly earnings

Do you really want to change to an interest only mortgage?
Can you really not afford the mortgage without you working full time? If so,maybe you need to stack up some savings before dropping your income for children - or arrange to take a mortgage "holiday" while you sort finances out.

I disagree with SleightiesChick about switching to interest only being risky - but do agree it's worth looking to see if you can get a better deal. In fact it's always worth checking to see if you can get a better deal, unless you're still in your deal period and would incur Early Repayment Charges or you have an LTV greater than 75% when it's really hard to get a good deal atm.

Only risky if you don't have any way to pay back the mortgage. Switching for a couple of years and then extending the term to get it paid off is fine.

Personally I have an interest only mortgage and make capital repayments, because the bastards banks weight your repayments so in the early years you're paying more interest off than capital.

JAMM I bow to your experience as a finance person - it's just that I used to be on interest only and it worked well at the time but I am so glad we've switched to repayment now as we had no savings or anything in place to pay off the total. It would have been easy to let that slide year in, year out, which I think is the danger with interest only, especially if you are close to the limits of what you can afford anyway which it sounds like the OP is.

You are right Sleighties. Left to slide it can be a massive problem. But most mortgages are for 25 years and with a young family there'll probably be moves and new mortgages.

Discipline is the key I think. And self-control

Right, I've just bought my last christmas prezzie - I am now officially living frugally in the hope I will be able to afford to TTC sometime in the new year! Thanks again for all your sage advice, made it all a lot clearer for me.

Your tax credits will vary depending on what months your maternity leave is spread over. ie they dont consider what your income is at present and then make a annual prorata calculation, they base your award on your actual tax year income. Considering that most peoples' mat leave spreads over 2 tax years it can take 3 years for the amounts to "settle".

So your tax credits for the first couple of years will vary depending on what month you go on mat leave.

When I was TTC I cleared all my debts and saved up enough to cover the shortfall between what I needed to live on and MA for 12 months. The amount you need to save will depend on how long you want to take off.

You also need to consider childcare costs. These are huge but my tc's covered them.

And maybe think long term about when/if you'd want another DC and if you'd want to or would be able to afford the childcare to go back to work. CC for 2 under 5's is often c. £1000pcm.