If you have children and are looking for a mortgage, the chances are you will be offered a lower mortgage than a childless couple. That’s the result of some research carried out by the Daily Mail who claim that lenders are ‘penalising’ parents for having children.
The newspaper reports that ‘childless couples can borrow up to 50 per cent more than young families – despite earning the same salary’.
Lenders offering much lower mortgages to couples with kids
The Daily Mail looked at the borrowing potential of a couple who each earned Britain’s average salary of £25,000.
They found that ING Direct would lend £200,000 to the couple if they had no children, but only £158,715 to the same couple with three children.
Santander would lend £237,625 to a couple with no children and a gold-plated credit score, but only £219,485 if they have two children. Nationwide would agree a mortgage of over £225,000 to the childless couple, but only £217,100 to a couple with three children.
Couples with children being ‘penalised’ by lenders
The newspaper found that most mortgage lenders penalise couples with children in this way. A spokesman for the Council of Mortgage Lenders said: “There is more and more pressure on lenders to take account of affordability, and this includes children. There is a danger that the balance of regulation puts too much emphasis on lenders to take responsibility for judging the borrowers’ ability to pay.”
A spokesman for Nationwide, the UK’s biggest building society, said: “The amount we lend will vary with each customer’s circumstances. Families with children tend to have different expenditure levels to those without.”
However, some mortgage experts disagree. Melanie Bien of mortgage broker Private Finance said: “Couples with children are being penalised by mortgage lenders. The rationale is that they have higher outgoings, so can’t afford as big a mortgage, but this seems unfair when their social lives will be more limited and therefore cost less.”
