4/09/2019
Industry needs to go back to school when assessing childcare costs

Accord broker panel think it’s a case of “could try harder” for those helping young families with mortgages

If you are one of the many thousands of parents whose child is starting primary school this term, there may also be an even greater reason to celebrate, not having to pay for full time childcare. But, for working families with children under three, the financial burden can be a debilitating one, especially for those trying to secure a mortgage.

With such considerable monthly outgoings, affordability calculations may be impacted. At a recent event Accord held with a panel of brokers, many raised the recurring issue of applications from parents with young children who have large nursery bills every month.

Assessing someone’s long term affordability on such a short term financial commitment (most parents’ costs are considerably reduced when they receive 30 hours free childcare per week in the term following their child’s third birthday), seems like a schoolboy error.

There’s homework to be done. Brokers need to ensure borrowers have a long term view of childcare costs, looking at expenses that can soon add up even when the child starts school, such as wrap-around care and holiday clubs. There should be a plan in place and these outgoings factored into any affordability calculations, ensuring the family are not put in a difficult financial situation. There’s also conversations to be had around growing a family and any additional costs which may be on the horizon.

Lenders also need to play their part. At Accord, our common-sense approach to lending means we could ignore childcare costs if the child is due to start school within six months, although additional expenses such as wrap-around care will be taken into account.

We also look at the bigger picture and review applications on a case by case basis. Brokers are given direct access to our underwriters to ensure all the details can be considered and a sensible decision given.

But we know we could do more, so we’re currently looking at other options for young working families, to ensure that their futures are not hampered by out of date policies.

Starting a family is a huge financial commitment, but it’s also a time when you will need more space, want a bigger garden and like to be in an area with good schools. It’s a time when moving is a very real possibility, which lenders need to accommodate.