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Parents of young kids could borrow more: YBS

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31/08/2017
Parents with children under five years old could see a 17% uplift in the size of mortgage they can afford to borrow once the government's childcare scheme providing 30 hours' free childcare a week is launched.
Parents of young kids could borrow more: YBS

From tomorrow, the number of hours of free childcare parents with pre-school children aged three and four years are entitled to doubles from 15 to 30 hours a week.

 

Yorkshire Building Society calculates that this could save parents more than £210 each month, based on average full-time childcare costs being £963 a month.

“This monthly saving could be used to pay off their mortgage earlier, or for those looking to move up the property ladder the savings may help to increase the amount they could borrow,” said Yorkshire in a statement.

Around 390,000 families across the UK are eligible for the scheme.

A typical couple, each earning the national average salary of £26,156, with a child in full-time childcare receiving the universal free 15-hours childcare a month could borrow a maximum of £182,528 with the Yorkshire over a 25-year mortgage term.

If they receive 30-hours free childcare the couple could borrow up to £213,244,  an increase of £30,716.

“The new government initiative is great news for parents’ ability to buy the home they want. The extra cash will really make a difference, particularly for those looking to move on to or up the property ladder,” said Charles Mungroo, mortgage manager at Yorkshire Building Society.

“Parents who are happy in their current property could use the extra cash for home improvements or an extension. They may also consider making overpayments on their mortgage to pay it off quicker,” he added, and continued: “a word of caution though, most lenders will charge borrowers if they overpay beyond a certain percentage of their home loan, so always check the small print first.”

 

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