Childcare costs impact on mortgage applications

October 24, 2016 by Brendan O'Neill

Borrowers

According to a recent survey, parents applying for a mortgage are asking friends and family members to care for their children, in order to avoid the costs associated with childcare.

Research by Uswitch has revealed that one mortgage applicant in six had been refused a mortgage or offered a lower amount, due to childcare costs. The survey questioned 1,000 parents whose children were aged 12 or under, and they had submitted a mortgage application during the last decade.

According to Uswitch, some parents are trying to remove the cost of childcare from their expenditure while they are in the process of applying for a mortgage, as lenders take the expense into account when conducting affordability checks.

Tashema Jackson, of Uswitch, said that the number of mortgage applicants who felt it necessary to conceal their childcare costs was concerning, as this could impact on the ability to make repayments. The Council of Mortgage Lenders (CML) said:

“Lenders must take into account all the key financial commitments of borrowers. That could mean that those who have to pay for childcare may not be able to borrow as much as others with a similar income who do not have these commitments.”

CML stressed that lenders had to consider the circumstances of borrowers to make sure that loans are affordable. Data released by the organisation indicates that the demand for mortgages has increased since last year. Borrowers who have childcare costs may want to seek advice from a mortgage adviser who has studied on a CeMAP course to prepare for difficulties when applying for a mortgage.