Impact of nursery fees

Toykitchen

I'm looking to buy in the near future as a FTB with my husband. We have two children under 6 and pay around £1000 a month in total for nursery and wrap around care. This will reduce in January to around £600 until eventually reducing to £250ish a couple of years later.

Our joint income is over £80k and will rise in the near future (my employer has said I'll get a payrise in the new year - I expect around £2k max).

How much impact does these fees have on affordability?

Is it worth speaking to a broker at this stage or am I better waiting until the new year when our finances are higher and outgoings lower?  

Many thanks 

ACG

There is no exact science as a lot depends on the circumstance but where the commitment is substantial (substantial varies depending on your incomes etc).

As a ballpark, I would say £1k a month will knock around £40k off the maximum a lender will offer and £600 will probably be around half of that. Some lenders will take the lower figure with a valid reason that can be evidenced. 

Do you want to buy somewhere now or in the new year? If you want to buy sooner rather than later, speak to a broker now. If you want to hold off until the new year you will have more options as you are not relying on the childcare dropping. Although you may find you can get enough even with the childrcare as it is, so potentially still worth having the chat now if you want to move asap. 

Toykitchen

Thank you!

Ideally I'd like to move asap but based on what your saying I think we'd probably need to wait until childcare drops. It will definitely drop as we'll be entitled to 30 hour funding then. I'm in an expensive part of the country so unfortunately we need as big a mortgage as we can get to be able to something. 

ACG

I dont think you have anything to lose now to be honest. 
Speak to a broker, there are some lenders who will consider using the lower figure. If you dont ask and all that...

kingstreet

You may also "benefit" from the effects of income capping. For example, if your maximum loan is capped at 4.5 x income due to the loan to value. Sometimes quite large monthly commitments make less difference to affordability than you might think. Test different lender affordability calculators with each monthly cost - £0, £600 and £1,000 and see the impact.