Britain's banks are inherently biased against parents who try to get a mortgage

Having children could seriously hinder your chances of buying a home, judging by new research
by price comparison site uSwitch.

The survey showed that banks and building societies offer reduced mortgages to adults with children due to expectations that they would spend a bulk of their income on childcare costs.

uSwitch, said that 17% of families have been offered a reduced mortgage because of childcare costs — or have even been rejected.

It also reveals that 68% of families affected intentionally hid the true cost of childcare during the application process, in order to boost their chances.

Basically, the system is inherently biased against those with children versus those who do not have any dependents.

Childcare has not always been a factor in mortgage assessments. The policy was introduced in April 2014, when the government implemented the Mortgage Market Review. The law now requires that lenders consider a much greater variety of household costs before they could grant a mortgage.

That is because the financial crash of 2007/2008 was due to more liberal mortgage lending rules, when people could obtain a mortgage even if their income was very low.

While a move to tighter lending rules might seem sensible, the fact that childcare costs are now factored into mortgage lending decisions makes it very difficult for families in the UK — childcare costs have risen by 38% in the past five years.

Tashema Jackson, a spokesperson for uSwitch, said: “Not only are parents 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,” she added.

Not only that, but many lenders do not appear take into account the fact that childcare costs vary massively depending on the age of children.

41% of families surveyed said mortgage lenders did not ask or take into consideration the ages of their children — despite the fact that the cost of childcare can drop by up to half between the ages of two to three, when the government’s free childcare scheme kicks in.

“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,” Jackson said.

Taking into account the ages of children during the application process will help reassure mortgage applicants that they are not being unfairly penalised for costs which are relatively short term,” she added.

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