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Published: 9th February 2016
Updated 17/03/2020
If you are looking for additional information in regards to child maintenance and mortgage, we have collated some updated details for you.
Original Article Published: 9th February 2016
Many divorcing and separating couples believe that they can't successfully apply for a mortgage when their sole income (or the majority of their income) is made up from payments of child support.
The truth is that it depends on the lender you approach; a small number of lenders will allow 100% of a borrowers income to come from child maintenance payments, whilst other lenders either accept 50% of income from child support or refuse to acknowledge this as income at all, making it very difficult for divorcees to prove that they have sufficient income to be able to make repayments on the mortgage.
Mortgage lenders that do take child support into account do so on the provision that the borrower has proof of the income via a court order or the Child Support Agency (CSA).
By the end of 2013, the CSA was replaced by the Child Maintenance Service, with the government encouraging more separating couples to come to their own private arrangements in regards to child support and maintenance payments.
There are different rates at which you may be expected to pay, depending on your financial and living situation.
If you and your ex-partner no longer live together, but you are still paying mortgage payments on the property you once shared with your child(ren), you may have to pay the Basic Rate, this could be a factor to help reduce mortgage payments, as well as having to pay for school fees.
For parents who are on benefits and earn less than a £100 a week, you may be considered for the Flat Rate, in which you will pay a flat rate of £7 per child, per week.
There is also the chance that you would pay no child maintenance. You may even have parental responsibility but are either a full time-student, aged 16-19 or living in a nursing home.
For more information on maintenance rates, please visit the GOV.UK website to calculate your child maintenance.
One issue which might lead to complication with the government encouraging private financial arrangements is that couples then make the arrangements between themselves and without the involvement of the CSA or the courts, which might then make it harder to provide proof to lenders who require evidence in the form of a statutory order or via the CSA.
The main problem that divorcees have always faced is the lack of consistency from mortgage lenders in regards to how they view child maintenance payments, which limits a single parents' ability to apply for a mortgage.
This often affects women the most, as they may have had to leave their jobs or reduce their hours in order to look after their children. In some cases they may be at a further disadvantage if they typically left the responsibility of managing the finances to their partners.
A recent survey from Money.co.uk suggests that just over 25% of women admitted to leaving the management of household finances to their partners, compared to only 8% of men who said the same.
It's not only women that are hit the hardest; divorce rates are particularly high for those in their forties and with the number of elderly couples getting divorced increasing, they too could be faced with difficulties when applying for a mortgage.
It is always advised that you shop around and speak to different mortgage lenders; just because one might not take child maintenance payments into account, it doesn't mean that you can't get a mortgage elsewhere.
It is also advised that any payments made via private arrangements are paid through a standing order rather than paid in cash, as you will have proof of your child maintenance income on your bank statements.
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