Families face 75pc cut in mortgage borrowing limit

[ElenorRigby]

Parents penalised as mortgage lenders take the cost of bringing up children into account

Good. I went to see a mortgage broker last week and was very surprised to be offered nearly four times our joint income.

Taking childcare costs into account, there is no way we could afford repayments on that. A lot of people are surprised by how expensive children are.

Its incredible that childcare costs haven't been taken into account prior to this. For some families their childcare costs are higher than their mortgage/rent.

I thought lenders were already doing this.

Oh god

DH and I are wanting to buy next year and will have two DC by then.

We pay £950 a month in rent - would we get a mortgage that was roughly the same every month? Seeing as we have proved for years we can pay it...

Lenders are a lot stricter. My sister borrowed about 30k 4 yrs ago on her mortgage to extend her house. She had lots of equity and she said she was on the phone to them for about 20 mins and the money was in her bank in a week or 2. last year she decided to add another 4k to her mortgage to do her bedroom and they wanted to know exactly what her outgoings were and even asked her to come in and questioned certain debits on her account . She is well paid and has very little mortgage and still they were that strict

'We pay £950 a month in rent - would we get a mortgage that was roughly the same every month? Seeing as we have proved for years we can pay it'

Not necessarily.

I too thought many lenders were already doing this.

I know that my student loan payments and my pension contributions were factored in when I took out a mortgage in 2011. None of the lenders we spoke to were looking at salary multiples only.

Ilikebirds I thought student loan was exempt

They have been doing this for a while now. Affordability is now the criteria for most lenders. Far more sensible than multiples of income IMHO. They had to change after the stupid over lending that went on five years ago. Childcare is most families biggest outgoing.

Bit daft, if you ask me. Our childcare bill was only very high for a couple of years, we struggled during that time but now its fine.

This definitely isn't new. We remortgaged a year and a half ago and had to detail all our outgoings including childcare, school fees, how much I spend on food in tesco....

I thought they already did this. Pretty sure Nationwide did for us, in Autumn 2012. As we pay as much for childcare as for the mortgage this seems sensible to me.

No, not exempt. It's not counted as a normal loan would be, in that they don't care how much is outstanding (I don't think I was even asked) but they will take into account the monthly payments you have to make on it.

I'd say income multiples were the exception and the reason we used L&C for our new mortgage. They were able to get us a deal with a building society who still work on income multiples but they said that they will probably change to affordability as well at some point. I'm just hoping that when our 5 year fix comes to an end our childcare bill will be mostly gone.

It does seem silly in a way that they don't look at what you can pay as our mortgage payments aren't increasing that much as we have increased our term by 11 years.

So if you have a mortgage approved whilst you have no children, and then need to remortgage once you have had a child (if your fixed period ends and rates are rising say) you wont be able to?? Seems that will actually make life less affordable for those with children, as they are prevented from changing provider for a more affordable deal or fixing their mortgage to have some certainty over monthly costs.
It would be great to stop people borrowing more than they can afford, but potentially this will just trap people into expensive variable rates if their situation regards to having children changes after buying.

The single parent thing is interesting - do mortgage lenders take into consideration the income of child maintenance payments from ExH aswell as the outgoings of having a DC?

I think they do - I read somewhere else that if the maintenance is paid via CSA is carries more weight as more of a 'guarantee' of regular income. Some, not all, also take tax credits into a/c, although I was a bit alarmed when I remortgaged a couple of years ago that my broker was trying to get tax credits taken into a/c as if it was income, not money I didn't actually have to spend as it all went on child care costs. Maybe I misunderstood him, but that is what he seemed to be aiming for. It worked in the end as I got the mortgage, but with my deal now expired, the BS I am currently with would only lend me a third of what is now o/s.