Call us on 0344 346 3672
or arrange a callback

Will lender's take tax credit payments into account when assessing affordability for a mortgage ?

Posted on 1 February 2016 by victoria


Are there any lenders who will take our child tax credit payments into consideration when calculating our possible mortgage ?We pay out £422 per month in child care costs but these are easily covered by the £706 child tax credits and child benefit payments we receive every 4 weeks. Obviously, if these are not taken into consideration then our 'borrowing amount' is minimal. Thanks for your help.

There are some lenders who would consider child tax credits, child benefit and working tax credit in addition to earned income when assessing affordability for a mortgage.  However, this will be dependent on how many children you have and what age they are, in addition some will cap the amount of benefit they will consider. Some high street lenders would take 100% of these forms of benefit income whilst others would cap it at 60%.

Letters from the tax office confirming receipt of these benefits would be useful when calculating how your income is derived, this documentation is also likely to be needed by a lender.

 

 

Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.

We recommend you seek professional advice with regard to any of these topics where appropriate.


Legal

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY DEBT SECURED ON IT.

John Charcol is a trading name of John Charcol Limited and its Appointed Representatives. John Charcol Limited is authorised and regulated by the Financial Conduct Authority. The Financial Services Register number is 665649. Registered in England No. 9157892. Registered office address for John Charcol Limited is 5th Floor, Cutlers Exchange, 123 Houndsditch, London, EC3A 7BU. The FCA does not regulate some investment mortgage contracts. Calls may be recorded for training and monitoring.