Government childcare scheme could boost borrowing power for parents

September 9, 2017 by Brendan O'Neill

Borrowers

According to the Yorkshire Building Society, parents who have children at preschool age may soon be able to borrow more thanks to a free childcare scheme launched by the government.

The lender stated that the new scheme was launched in September, and is available to parents who have children aged three or four years old, possibly gaining up to 30 hours of free childcare each week. This could save parents around £210 a month. The cost of childcare for one month is estimated at £963.56, so the new scheme could result in significant savings for parents, boosting their borrowing for a home.

According to the Yorkshire Building Society, a couple earning the average salary of £26,156 that has a child in childcare receiving 15 free hours a month would be able to borrow £182,528 over 25 years. However, if they received 30 hours of free childcare, they would be able to borrow £213,244.

First-time buyers may be among those who will benefit from the scheme, following a recent boost to sales figures. Yorkshire Building Society’s mortgage manager, Charles Mungroo, said that parents often require more space as they expand their family, but paying nearly £1,000 a month for childcare can impact on ability to move up the property ladder.

However, experts warn that parents should consider how they would manage mortgage repayments in the future when the free childcare ends. Mortgage advisors are trained to a CeMAP standard and stay up to date with changes that could impact on buyers, offering solutions where possible.