New research has revealed that having children could seriously damage your chances of getting a mortgage. According to price comparison website uSwitch.com, one in six families have been offered a smaller mortgage because of childcare costs while some have even been turned down. Tashema Jackson, money expert at uSwitch.com, said: “Parents are being stung with […]
New research has revealed that having children could seriously damage your chances of getting a mortgage.
According to price comparison website uSwitch.com, one in six families have been offered a smaller mortgage because of childcare costs while some have even been turned down.
Tashema Jackson, money expert at uSwitch.com, said: “Parents are being stung with a financial double whammy. Not only are they having to cope with sky-high childcare costs, but this burden is also impacting their ability to secure the best mortgage deal.
“It’s worrying that many feel under pressure to conceal these costs during the mortgage application process, as this may have a severe impact on their ability to meet repayments in future.”
Many lenders now take childcare costs into consideration as part of their affordability assessment following the introduction of the Mortgage Market Review in April 2014 which brought in stricter lending criteria.
The research revealed that 68% affected families were having to hide the true cost from lenders in an attempt to secure a better deal.
Uswitch also uncovered inconsistencies between lenders and the questions they ask to determine an applicant’s eligibility.
More than two-fifths (41%) of families said their lender didn’t ask or take into consideration the ages of their children while only 39% of families were asked how their childcare costs may change as their children got older.
Childcare costs can drop by up to half between the ages two and three when the government’s free childcare scheme kicks in.
uSwitch believes that all banks should take this into account when deciding the affordability of a mortgage, by considering the age of children during the application process.
“While lenders have a responsibility to make sure people only borrow within their means and can afford future repayments, they also need to reassure homebuyers that their whole financial picture is being considered. Taking into account the ages of children during the application process will help reassure mortgage applicants that they are not being unfairly penalised for costs which are relatively short term,” said Jackson.
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