On the 20th August, we are making changes to the way we capture childcare costs, in order to accurately take into account the customer’s monthly childcare expenses.

What’s changing?

We will now use the amount the customer has declared and will no longer use ONS data in our affordability calculations. Customers with dependants will be asked about the type of childcare they use, how often and how much they spend. We are implementing this change to make sure we capture a true reflection of the customer’s financial circumstances and expenditure.

  • Customers will now be asked to include their specific childcare costs as a Financial Commitment and will cease to use the average ONS data for this outgoing.
  • There is no formal evidence which is required for childcare costs, however if there is a difference between what is on the evidence provided as part of the application and the declared costs, this should be challenged/discussed to ensure the correct figure is used for the customer.
  • As part of the affordability discussion (which takes place as part of your advice process) , you will already be discussing with the customer whether it’s certain or likely that childcare costs will change over the next 5 years. The highest figure should be used over the 5 year period.
  • In some circumstances childcare costs may be unknown, for example if the customer is currently pregnant, on maternity leave or if childcare arrangements are yet to be made. Customers can suggest likely future costs or you can refer to the national average figures, which are located in our A-Z section under ‘childcare’ here.

When should childcare costs not be calculated?

There are a number of situations where childcare cost should not be captured in the affordability calculations. These include:

  • Where customers are using free childcare e.g. a relative to look after their child.
  • Where the childcare costs are stopping within the next 6 months.

Transitional arrangements

  • Updated affordability calculation as outlined above will be applied to all agreements in principle (AIP) and full mortgage applications (FMA) submitted from Monday 20th August.
  • For website applications this means updated calculation will be applied to previous AIPs when they are progressed to FMA.
  • Our Mortgage Operations team will refer to the AIP date for MTE applications and apply the calculation appropriate to that date.
  • All applications in Mortgage Operations pipeline prior to 21st August will be assessed using the calculation at the date of their submission.