Childcare costs have caused one in six families to be turned down for a mortgage, and two-thirds have tried to hide these costs when applying, according to uSwitch.com. These costs are viewed as non-discretionary and impact a mortgage applicant through formulaic affordability tests. Families criticised lenders for not accounting for childcare costs decreasing over time as children become eligible for free government care. Most parents say they have used grandparents or friends to lower childcare costs in the run up to a mortgage application. Lenders should consider a borrower’s whole finances when assessing affordability, a uSwitch.com money expert said.
Key Takeaways:
- One in six families have been turned down for a mortgage – or have been told they can only borrow less – because of the sums they’re having to spend on childcare.
- Stricter lending criteria introduced under the Government’s Mortgage Market Review two years ago mean that “affordability tests” for families now apply
- Price comparison website uSwitch.com, which undertook the research, found that two-thirds of families say they have tried to hide the cost of their childcare in the run-up to the mortgage application process.
“Research among 1,000 parents with children aged 12 and under, and who had applied for a mortgage in the past 10 years, found 17pc cited childcare costs as a reason they struggled to obtain a mortgage.”