Childcare costs and Mortgages

JamesA123

Hi,

We're finding it hard to get a mortgage of the amount we need due to childcare costs (about 700 a month on average). We've enough deposit to be better than 75% LTV and the amount we want to borrow is a bit under 5x our combined wage. The problem is, childcare is taking about 100K off what we could borrow, so we don't have enough for the house. We currently have about 6K in a vehicle loan to be paid off within a year, and our child goes to school a year in September. My solution is to pay off the loan using the deposit and give the childcare money to my parents to pay the nursery. This still leaves us with a deposit enough to be below 75% LTV.

Can I make this work with a mortgage lender?

Thanks

K_S

@jamesa123 If you have the cash to cover 15 months worth of childcare, over and above the deposit and buying costs, it won't pass muster with all lenders but might with some which are able to apply a bit of common sense.

The low LTV helps and if your app is high income and relatively large loan size, that will help as well if there's subjectivity involved.

I'm not entirely sure how an underwriter would view paying parents a lumpsum and them paying it on.

If you're struggling to make it work, I would recommend getting in touch with a good experienced mortgage broker who can speak to a few of the more flexible lenders and see what they say.

Good luck!

JamesA123 said:

Hi,

We're finding it hard to get a mortgage of the amount we need due to childcare costs (about 700 a month on average). We've enough deposit to be better than 75% LTV and the amount we want to borrow is a bit under 5x our combined wage. The problem is, childcare is taking about 100K off what we could borrow, so we don't have enough for the house. We currently have about 6K in a vehicle loan to be paid off within a year, and our child goes to school a year in September. My solution is to pay off the loan using the deposit and give the childcare money to my parents to pay the nursery. This still leaves us with a deposit enough to be below 75% LTV.

Can I make this work with a mortgage lender?

Thanks

ACG

Im doing a mortgage for a couple at the minute. Their childcare drops from £2,500 to £1,450 in September when their eldest starts school. 

The lender has asked for the letter you get from the council confirming the childs place in school starting in September and a letter from the nursery confirming that come september with one child, the nursery fees will drop to £1,450. 

Its still going through at the moment, but it will be fine. I checked it all before applying. 

Some lenders will just take your word for it. 

K_S

ACG said:

Im doing a mortgage for a couple at the minute. Their childcare drops from £2,500 to £1,450 in September when their eldest starts school. 

The lender has asked for the letter you get from the council confirming the childs place in school starting in September and a letter from the nursery confirming that come september with one child, the nursery fees will drop to £1,450. 

Its still going through at the moment, but it will be fine. I checked it all before applying. 

Some lenders will just take your word for it. 

@acg This September would've been straightforward, I read the OP to mean September 2024. Perhaps I misunderstood.

ACG

K_S said:

ACG said:

Im doing a mortgage for a couple at the minute. Their childcare drops from £2,500 to £1,450 in September when their eldest starts school. 

The lender has asked for the letter you get from the council confirming the childs place in school starting in September and a letter from the nursery confirming that come september with one child, the nursery fees will drop to £1,450. 

Its still going through at the moment, but it will be fine. I checked it all before applying. 

Some lenders will just take your word for it. 

@acg This September would've been straightforward, I read the OP to mean September 2024. Perhaps I misunderstood.

Good shout. I missed that. 

I think somewhere in the back of my head, there is a lender where if you can evidence you have the savings they might ignore it. But I am now sure if they would be happy with around 18 months to go.