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Using your child maintenance in a mortgage application can make things more complicated. But it is possible. Here we look at which lenders accept child maintenance and tips for making a mortgage application with child maintenance.
Applying for a mortgage using child maintenance as income can make it more complicated. There are factors that will come into play with lenders, such as how long you’ll receive child maintenance payments for and whether you have a formal agreement in place.
But lenders are becoming increasingly flexible when it comes to child maintenance and mortgage applications. So whether you’ve retained the family home or you’re looking to buy a new property and you receive child maintenance payments, here’s what you need to know about using child maintenance in your mortgage application.
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Your home may be repossessed if you do not keep up repayments on your mortgage.
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The first thing to know when it comes to making a child maintenance mortgage application is that different lenders have different lending criteria when it comes to using child maintenance in a mortgage application.
Some lenders will take into account 100% of child maintenance. However, some lenders will treat the income as secondary income which means that they may only take 50-60% of the maintenance payments into account when deciding how much they could lend. While other lenders won’t take it into consideration at all. And there are other factors that will come into it too. These include how long you will be receiving the payments for and in some cases whether you have a formal agreement in place or not.
Each lender has different lending criteria. And if you want to include child maintenance in your mortgage application as income, most of them require you have a formal agreement in place about payments. For example:
Generally speaking, if your child maintenance payments have been awarded by court order or the Child Maintenance Service, this will typically improve the choice of lender that will take the income into account.
There can be problems for those who have had child maintenance agreed in an informal agreement between the two parties. But it doesn’t mean your maintenance income won’t be taken into account. More lenders are now able to look at a track record of payments being made as adequate evidence.
According to experts, it is an area where lenders may be more flexible than many people expect them to be.
Find out how much you can afford to borrow on a mortgage without over stretching yourself with our How Much Can I Afford? guide
Our Mortgage Expert Sarah Tucker says,
“Many people assume child maintenance won’t be accepted as income for a mortgage, but lenders are often far more flexible than borrowers expect.
Some lenders will take the full amount into account, while others may only use part of the income or have different requirements around evidence and how long the payments are likely to continue for. Because lenders can assess child maintenance income so differently, speaking to a mortgage broker early on can be incredibly valuable as one lender may be far more flexible than another.”
When a lender is considering your application they will need to assess your ability to afford your repayments for the duration of the mortgage. If you’re using child maintenance as income in your mortgage application the lender will typically look at how long you will be receiving it for. This means the age of your child or children may be taken into account. And the lender will also take into account your earned income too. Lenders will want to see that the situation is sustainable, so that the mortgage will remain affordable when those maintenance payments cease.
Get fee-free mortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.
Again, this will vary by lender. Some lenders may take these benefits into account but there may be questions. For example, a lender may not accept these if your child is above a certain age. While others may not accept child benefit as income if one applicant earns £60,000 or over – the point at which you need to start paying the High Income Child Benefit Charge.
When it comes to finding the best mortgage deal for you, it’s always a good idea to speak to a mortgage broker, but if you’re planning to use child maintenance as income when applying for your mortgage, a broker’s advice can be even more helpful.
They will break down how your income is made up into what you earn and any child maintenance payments, and they’ll ask if there is a formal court order in place and how long will the child maintenance be paid for.
Lenders’ criteria can vary substantially in this area. So once your broker has this breakdown, they’ll use their detailed knowledge to find the right lender for you.
Get fee-free mortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Please note some branches of Mortgage Advice Bureau may charge a fee for mortgage advice if you go direct. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed. So make sure you use this site, this form or phone number for fee-free advice.
HomeOwners Alliance Ltd is registered in England, company number 07861605. Information provided on HomeOwners Alliance is not intended as a recommendation or financial advice.
HomeOwners Alliance Ltd is an Introducer Appointed Representative of Mortgage Advice Bureau (Derby) Limited which is authorised and regulated by the Financial Conduct Authority.
HomeOwners Alliance Ltd is an Introducer Appointed Representative (IAR) of LifeSearch Limited, an Appointed Representative of LifeSearch Partners Ltd, authorised and regulated by the Financial Conduct Authority. (FRN: 656479).
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