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Families hide childcare costs after experiencing mortgage rejection

Written by: Paloma Kubiak
A combination of higher childcare costs and stricter lending criteria means families turned down for previous mortgage applications hid the true cost of childcare in the next application process.

One in six families said they’ve been penalised by mortgage lenders in the last ten years over childcare costs, according to price comparison site

With the introduction of stricter mortgage eligibility criteria under the Mortgage Market Review in 2014, many lenders now take childcare costs into consideration as part of the affordability assessment.

But as childcare costs have risen by 38% in the past five years, more than two thirds of families said they have hidden the true cost in a bid to secure a better deal.

Three in ten admit that they relied on grandparents for free childcare while 27% asked friends to pick up kids from nursery or school while 23% reduced their hours at work to look after their kids.

When asked why they changed their habits, 56% said they were worried the extra expenditure would prevent them from securing the best rates while 48% feared their application would be rejected altogether.

However, uSwitch said six in ten parents experienced high levels of anxiety and nearly half said it caused arguments in their relationship.

Its research, which included a poll of 1,000 parents, also revealed inconsistencies between lenders and the questions they ask to determine an applicant’s eligibility.

More than two fifths (41%) of families said their lender didn’t ask or take into consideration the ages of their children, to find out if costs may reduce in the near future.

And only 39% of families were asked how their childcare costs may change as their children got older. With the introduction of the government’s free childcare scheme, uSwitch said all banks should take into account the age of children when deciding the affordability of a mortgage.

‘Double whammy of costs’

Tashema Jackson, money expert at, said: “Parents are being stung with a financial double whammy. Not only are they having to cope with sky-high childcare costs, but this burden is also impacting their ability to secure the best mortgage deal. It’s worrying that many feel under pressure to conceal these costs during the mortgage application process, as this may have a severe impact on their ability to meet repayments in future.

“While lenders have a responsibility to make sure people only borrow within their means and can afford future repayments, they also need to reassure homebuyers that their whole financial picture is being considered.”

She said that parents mustn’t be “unfairly penalised” for costs which are relatively short term.

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