This is according to a mortgage expert who is speaking out after it was announced a parliamentary debate into the cost of childcare would go ahead to address the problem.
You may not immediately see the connection between childcare and mortgages – but when lenders assess affordability they look at income as well as what’s paid out.
With nursery fees eating into 35% of the average family’s income – it can make a huge difference to lenders’ decision, which means it can have a huge impact on whether or not they will be able to take out a mortgage.
Rosie Fish, a mortgage expert at mortgage broker Habito, said: “In most cases childcare is the single biggest commitment aside from their housing costs, which means that affordability would increase if child care costs were reduced.”
Petition
The UK has the third most expensive childcare system in the world with many parents often choosing not to work because the cost of paying out for nurseries is more than they would earn.
The parliamentary debate was given the go-ahead after more than 100,000 parents signed a petition calling for an independent review into the affordability of childcare.
The campaign, led by charity Pregnant Then Screwed, has piqued the interest Habito, which said childcare can cost, on average, £14,000 per pre-school child per year.
It means many parents – usually women – end up effectively paying to return to work even have to give up their jobs because they cannot afford to go to work and pay for childcare.
This has a negative impact on all parents, said Habito, in particular working mothers and single parents.
What’s more, the online mortgage broker described it as ‘pretty terrible for your mortgage application’.
Rosie added: “It can vary lender to lender, but both Natwest and Santander seem to be the better lenders when you have childcare costs.
”Pregnant Then Screwed have called for the government to review the eye-watering cost of childcare in the UK. Their petition has gained more than 107,000 signatures, which means that parliament will consider the issue for a debate.”
