Childcare Voucehers - Mortgage Application

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seagull12
seagull12 Posts: 14 Forumite
edited 9 October 2018 at 9:52AM in Mortgages & endowments
Good afternoon all,


I've gone an re-vamped my profile (apparently I was last here in 2013!) to seek some assistance. Please be gentle!


I'm considering the possibility of moving next year. Probably around March/April is when I'd consider listing our property.


This was our first home (bought 7 years ago) so I'm quite out the loop!


Since then, our 10 month old has arrived on the scene and we now pay childcare via childcare vouchers. I salary sacrifice £243 worth of vouchers per month. This is my only childcare cost.


What I want to know is, on my 'outgoings' on a mortgage application, can I claim that my childcare expenses are £150 and not £243?


The rationale - I 'only' lost a take home value of £150 by using this tax-efficient scheme. I am not losing £243.


In my mind, if the whole process is meant to determine what my 'take home' pay/outgoing are then this wouldn't be 'bodging' the system. The difference in my quote is quite substantial for each figure.


Thanks in advance, and apologies for the essay.

Comments

  • ACG
    ACG Posts: 23,727 Forumite
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    I think you would need to declare the £243. This comes up far less for me than I expected it to so I am not best placed to answer the question.

    Does £53 make a huge difference to how much you can lend? I would have thought maybe £2k at most?

    But anything like this, it is worth speaking to the lender(s) you are thinking of applying to beforehand.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • seagull12
    seagull12 Posts: 14 Forumite
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    ACG wrote: »
    I think you would need to declare the £243. This comes up far less for me than I expected it to so I am not best placed to answer the question.

    Does £53 make a huge difference to how much you can lend? I would have thought maybe £2k at most?

    But anything like this, it is worth speaking to the lender(s) you are thinking of applying to beforehand.



    Thanks for your reply. It would be £93 difference a month (£1116 per year). Having done the provisional calculation I think it was about 4k-£5k difference from what I remember.
  • europaea
    europaea Posts: 7 Forumite
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    I had the same issue and - to fix it - I enrolled in tax free childcare and stopped using childcare vouchers. With tax free childcare you don't have this issue, as you would only need to declare the payments that you make into the TFC system, and that equals exactly how much you pay out of your income for childcare. Tax relief (20%) is added later by the govt.
  • seagull12
    seagull12 Posts: 14 Forumite
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    europaea wrote: »
    I had the same issue and - to fix it - I enrolled in tax free childcare and stopped using childcare vouchers. With tax free childcare you don't have this issue, as you would only need to declare the payments that you make into the TFC system, and that equals exactly how much you pay out of your income for childcare. Tax relief (20%) is added later by the govt.

    That's very interesting. Thank you.


    I've looked into this and I think I signed up for the Childcare Voucher scheme before the cut off as I concluded that my take home pay would actually be better than if I did the tax-free childcare. With the vouchers, my tax and NI also decrease so at the time it seemed a no brainer with my wifes decreased income.


    I'm thinking I will need to sit down with a mortgage advisor and see how this is best represented.
  • amnblog
    amnblog Posts: 12,445 Forumite
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    Lenders will typically have an options to enter such payments as pre tax salary deduction.

    Back to the golden rule of 'do not change your world simply because you think it will improve your chances of getting a mortgage'.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • MrBananas
    MrBananas Posts: 15 Forumite
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    Is the childcare essential? Our childcare costs had a note on the mortgage application that they were non-essential (they are just to give my wife a break, rather than required for me to go to work) so the lender did not take them into account for affordability checks.
  • seagull12
    seagull12 Posts: 14 Forumite
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    MrBananas wrote: »
    Is the childcare essential? Our childcare costs had a note on the mortgage application that they were non-essential (they are just to give my wife a break, rather than required for me to go to work) so the lender did not take them into account for affordability checks.

    Unfortunately they are. Its for one day a week when my wife is at work.
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