Impact of children on mortgage

[GulliverUnravels]

DH and I are planning to start TTC in the next month or so. We're also wanting to buy a house in the next year or so once we've topped up our savings. It'll be the first time that either of us has a child or buys a house, and we wondered whether having a baby will affect our chances of getting a mortgage. We're so early on in the process we haven't even spoken to a mortgage advisor yet, but if it was going to negatively affect getting a mortgage we would consider delaying TTC until after we've sealed the deal on the house.
Any advice is welcome :)
(FWIW we're both 30, in full time employment.)

Personally it’s better to do it before baby comes if you can. After that they’ll either deduct childcare costs from your affordability or it maybe that one of you will earn less from being part time or staying at home

I'd do it before if possible - childcare can be £1000+ a month for the early years and not all providers are as open minded if you are pregnant (even if your maternity package is fantastic you don't really know how you'll feel about going back to work until you are actually at that point).

Move first! Having a dependent will usually result in you being loaned less.

Yes - you will be asked if there are any circumstances affecting your income and you'll have to say yes as soon as you're pregnant (maternity leave and possible part time hours for one of you) will may affect the amount you can borrow. If you're actually on maternity leave when you apply some lenders will only consider your maternity pay as your income (rather than your salary) and after the baby is born, you'll have significant childcare costs. All of these factors may impact on the amount you'll be able to borrow.

I'm currently on Maternity Leave with my first child who is 2.5 Months Old.

My DP and I are looking to buy our first home and had a meeting with a mortgage advisor. He said some lenders might be wary about the fact I'm on maternity leave but he found plenty of lenders willing to lend to us whilst I'm on maternity leave. (Although some lenders definitely wouldn't consider us, the advisor did find plenty who would.)

Some wanted me to provide a letter from my employer stating my exact return to work date and they want the date to be sooner rather than later but other lenders where happy to take my word that I'd be returning at the end of the full years maternity but all those factors were based on my income (upon returning to work) and DPs income.

Good Luck OP

Definitely pre children. They will decrease your income, affordability calculation even if there are no childcare costs, as it's a dependent, thus a 'drain' on you income. If you have childcare costs it'll drop even more.

Not a problem if you are looking to borrow well below your current borrowing level but in all likelihood it will be a problem.

I would however make sure you look at how you can budget for a child (or 2 or more / however many you think you'd like to have) to make sure you borrow at a level that will still be affordable once you have DC.

Also I did get a mortgage whilst pregnant I just did my best to hide my bump when I went about a mortgage. They never asked so I never said.

Ah, dammit. I suspected as much, and thought I'd be fine with the idea of waiting to TTC, but there must have been part of me that hoped it wouldn't be necessary as now faced with evidence to the contrary I feel quite disappointed. Now that it seems likely in reality that we might have to hold off, I really don't want to!
@allysally, it's encouraging that your advisor has found some potential lenders for you. Maybe it's time for us to at least have a chat with an advisor even though we're not in a position to buy just yet.
Thanks for your responses, all!

They don't ask if you are pregnant. And we did all ours over the phone through a broker so didn't need to get in front of anyone. If you had a child they will ask about childcare costs but if you're still pregnant they won't be an outgoing at the point you apply.

And obviously if you're in the early stages of pregnancy things can and do go wrong which is probably a reason they don't ask. Just give honest answers to the questions they ask at the time you apply and all will be well.

To avoid stress you might want to apply first though and then crack in with ttc!

We are currently in the process of moving and I am due end of the month.

Our New Home wont be ready until Jan, so we have to apply for our mortgage last month as once my pay decreases to stat maternity I wouldnt pass the affordability.

An offer of mortgage lasts for 6 months.

So I went in to the advisor and hid my bump and did the rest over the phone.

They don't ask if you are pregnant not outright but most mortgage applications will ask whether you know of any circumstances which will affect your income - answering no to this when you're pregnant is not being truthful (previous job looked at borrowers in default and whether lender would allow extra time to get out of arrears etc - any hint of dishonesty and they'd be less than accommodating)

previous job looked at borrowers in default and whether lender would allow extra time to get out of arrears etc - any hint of dishonesty and they'd be less than accommodating

Oh gawd I had to google what some of those terms even mean So you're saying that if we were to get behind on our payments and the lender didn't have any leeway in terms of paying back the extra that we then owed, and if our employer found that out and also found out that I'd concealed my pregnancy, then it could have implications for my employment, correct?
I don't anticipate that we would get behind (though I realise nobody ever does!) But for most of our married life we've lived on a single income (as one of us has always been studying), and rented in central London, so we're used to being very frugal in terms of food, socialising, household goods etc. We were both also raised in very low-income families (but are both newly qualified professionals now, earning reasonably ok salaries) and our parents definitely didn't spend £200,000 (or whatever the current estimated cost is) on raising us ! So our expectations in terms of what children "need" are probably lower than people's who were raised in higher-income families. (I'm talking about second-hand furniture, not having a TV in their bedroom, not needing £100s spent on Christmas presents etc; I'm not talking about not feeding and clothing them - before anyone gets worried that we're not going to provide for their needs.)
So, all that to say that if the primary problem is the risk of getting behind on our payments, I'm not overly concerned about that as we've always lived within our means even when those means have been very small.

^^Not that that means I would necessarily be ok from a moral POV to conceal my pregnancy - but it's something I'd have to think about and figure out whether I'd feel guilty or not, and whether the guilt would mean I was always anxious about the lender later finding out and imposing some kind of penalty.

We applied before we started TTC no 2. Our daughter already started school and our childcare cost had reduced drastically (from £900 a month to just around £150 a month for after school club, covered by childcare voucher) so it didn’t affect our affordability at all. However, I got pregnant the month after we had our formal mortgage offer. There were no other checks, questions, etc after that as the purchase was straight forward. I’ll hold off TTC to be honest.

No, not saying that, didn't mean to alarm you.

I'm saying (as a pp said) that you need to be truthful with any application so if you were pregnant when you applied for a mortgage and if you're asked whether you anticipate any change in your income, you need to say yes (unless of course you get full pay on maternity leave etc).

If you don't, and if you later get behind on your mortgage payments, and you ask the bank to allow you extra time to make up the arrears, the bank will usually look at your account, ask you for details about your outgoings etc and may query details given on the application. If there's any doubt about some of the answers you gave they may take a harder approach.

It doesnt have implications for your employer, just your relationship with the bank!!

So many "ifs" - but the simple advice is just to be honest whenever you apply!

“Today 09:14 namechangedtoday15

They don't ask if you are pregnant not outright but most mortgage applications will ask whether you know of any circumstances which will affect your income - answering no to this when you're pregnant is not being truthful (previous job looked at borrowers in default and whether lender would allow extra time to get out of arrears etc - any hint of dishonesty and they'd be less than accommodating)”

But if you have any sense you still answer no, in the real world.

Having a dependent automatically reduces your borrowing limit. Even if you don’t have childcare costs

@glintandglide it's all a bit up in the air, lots of ifs, but don't agree with your sentiment, i'd always advocate being honest (on MN or the real world ).

So presumably theOP should be honest and inform them she is planning to TTC then @namechangedtoday15 ;). Would equally lead to a change in circumstances and no guarantees as per pregnancy. Mortgage lenders aren’t allowed to ask about pregnancy as this would count as discrimination. And Lol at not planning on spending much on unnecessary items for kids! No one does until you become a parent!

We had this problem and basically lied about my pregnancy. (I wasn't pregnant when we found the house, but after an almighty faff on the vendor's part I was a few months along when it came to arranging the mortgage.) We did however calculate carefully what our affordability/outgoings would be like post-baby.

Yes you can raise a baby cheaply in terms of clothing etc but childcare is the killer. This is what mortgage companies are looking at.

Ds1 is now 15, when he was in childcare the local nursery cost me a mere £27.50 a day then we moved to a city 14 years ago and that cost shot up to £32 a day.

That same nursery now charges £49.50 a day for a child under 3. A full time place of 5 days over 4 weeks would be £990. This is the material point. If you have twins could you afford to work?

Get the house first.

And Lol at not planning on spending much on unnecessary items for kids! No one does until you become a parent!

Haha fair enough! I read something on FB recently (posted by a parent) along the lines of "Parenting was so much easier when my children were imaginary and my decisions were hypothetical." ;)

@FreerOfIcefyre - I hadn't even considered twins . Very good point. We have a vague plan in mind to manage childcare mostly by me cutting my hours down to 2/3 and taking mostly night and weekend shifts, DH working from home very occasionally, and calling on our mums to babysit (they both have already expressed great enthusiasm for this as all the other DGC live overseas). But twins might put a lot of pressure on that plan.

@ianbealesonwheels - I wouldn't tell them we were planning to TTC. Feels like that could be a bit of an overshare lol! But our current plan was to start TTC in the next month or two, so by the time we actually applied for a mortgage in about a year I'd (potentially) be into my second trimester at least. But now definitely starting to think get the mortgage ASAP and then start TTC once that's secured.

A follow-on question in that case: If you become pregnant once you've already moved into the new house, can they at that point change the terms of your mortgage to reflect your new circumstances? Or once you've agreed your mortgage rate, that's it, it's agreed (subject to inflation / interest rate changes of course).
I'm very new to this as you can probably tell! And my parents have never been granted a mortgage due to their low income so have always privately rented, so they're not well placed to advise.

If you become pregnant once you've already moved into the new house, can they at that point change the terms of your mortgage to reflect your new circumstances?

I don't think so. But mortgages are usually for a fixed initial period and if thereafter you wanted to shop around/change mortgage provider for a better rate, you'd go through all application questions/affordability checks again... and with a (born) child about you'd presumably need to disclose/lenders would see your increase costs or lower income and it would affect affordability.

Sorry about the twins thing, I have 3 friends, one of whom had identical twins and 2 who had fraternal twins. Obviously none of these were planned twins and all natural conception so a bit of a shock

A couple of things to consider, firstly that parents doing childcare can be fraught with issues, or in my sister's case my Mum was amazing but was then diagnosed with terminal cancer and died a few months later. She was early 60s.

Secondly, you can never work from home whilst looking after a child, it is almost impossible long term.

The other issue to consider is if your child has additional needs you might not be able to put them into childcare depending on those needs.

I don't know how child friendly your workplace is, one of my friends with the twins was made redundant whilst pregnant which just made the decision for her as she didn't think she would be able to return to work.

And no, the mortgage company cannot suddenly change your terms and conditions because you had a child.

I just like to cover all bases. The probability is that it will all work out somehow like most of us, it just does. You find a way to make it work. But the childcare impact on your finances massively reduces your joint income hence why everyone is saying get a house before having children.

If you are looking for a mortgage, I can recommend London and Country who are recommended by Money Saving Expert. Just browse their site for ideas of lending and cost per month.