penalised on mortgage for childcare costs

[Pagetta]

This is more a rant than anything, but I'd be ineterested to hear from anyone else on this....

So we are buying a new build house and just had meeting with mortgage broker.

We have Plenty in savings to cover fees, deposit and lots more, absolutely no debt, and based on our earnings we should be able to borrow MUCH more than we require for this house according to some mortgage in principle agreements we did 3 months ago.

We both work full time, and have saved hard whilst renting to afford a nice family home.

So despite all this, our £750 a month childcare costs reduce what a lender would give us by about 20k - and push us up to higher rates!

How is this remotely fair?? We work full time to afford a nice house and then are penalised for it!

He will be in school in two years so it will stop or drastically reduce soon - why oh why is a 3-5 year cost such a huge impact? Especially when that cost will stop and wages will very likely rise?!

AGH why don't we just both quit work and apply for a council house :-(

sorry sorry rant rant

If you want a council house, apply for one. You won't actually get any less priority because you have a job, you know (But if you're adequately housed, or in London or the south of England you're very unlikely to get one)

But otherwise, it's quite normal for banks to take into account childcare costs. I had the same when I applied for a mortgage, they wouldn't lend me quite as much as at first it seemed they might.

They took our childcare costs into account but also our tax credits and child benefits were included as income. It didn't make much difference to us as we had a fair bit of equity but it did seem reasonable - it is a monthly cost, and in fact for 5 years childcare cost us more than the mortgage so it would have been silly to ignore it. And although it has gone down considerably, the cost of other things has risen - school 'voluntary' trips, clothes, etc etc adds up pretty quickly.

It would definitely be worth looking around more though as we found different lenders had wildly different criteria for 'affordability'. This was in 2011 and the lowest offer from one bank was about 42k and the greatest from another was 181k!! Quite how they worked that out I don't know - bit of a difference there.

We had this problem - but also due to not having long enough income records my income was not taken into account. fine and fair enough - dh's should have been enough for what we needed. Except they wouldn't accept that if i wasn't working the childcare wouldn't be needed so could also be ignored!!

Try Natwest - they don't take childcare costs into account. We have just taken out a mortgage with them and the broker confirmed it. I'm surprised your broker hasn't mentioned it.

This happened to us too - I applied direct to The Post Office and got turned down on affordability, even though we in theory has enough money to buy the house for cash (but didn't want to as we would have had no savings left). I then called a broker who knew exactly which lender would a) look favourably on us and b) give us an offer quickly so we didn't lose the house. He was brilliant. Happy to recommend him if you send me a pm.

Good luck!

Banks have to be stricter now and they are looking at affordability now not what will happen in years to come. £750 is a huge outgoing and as others have said even once at school there is stills costs.

Bit late now but it is my understanding that Halifax don't take childcare into account as it is temporary.

He will be in school in two years so it will stop or drastically reduce soon - why oh why is a 3-5 year cost such a huge impact? Especially when that cost will stop and wages will very likely rise?!

So in two years time remortgage onto a new fix and take advantage of the better rates available to you.

Oh. Zombie.

Yes, this is a known effect on how much you can borrow. That's why we bought a house before having children (and never mentioned any plans to have any to the broker).