Does child maintenance count as income for my mortgage application?
During divorces and separations, one of the key areas to consider is mortgage raising capacity and how separating parties' housing needs will be met. For parents, often mothers, who are in receipt of child maintenance it can be hard for them to find a mortgage company who will take their maintenance monies into account.
I have recently read, however, that Ipswich Building Society is easing its rules so that they will take into account child maintenance payments when assessing an applicant for a mortgage. This is provided the maintenance is being paid by virtue of a court order, through the Child Maintenance Service (CMS) and has at least five years left to run. If you are looking for a mortgage provider, there is a list of which lenders will take into account child maintenance payments, whether fully or partly, on This is money.
The government made changes to what was the Child Support Agency, which is now the CMS, to try to encourage parents to reach informal agreements about the payment of child maintenance, including in 2014 introducing charges for using the service.
Married couples, or those in a civil partnership, who are divorcing can include their agreement about the child maintenance amounts in a court order dealing with everything else. Unmarried parents, however, have no way to formalise child maintenance payments other than through the CMS. This may mean that they have to use the CMS, even if they have reached an agreement, so as to be able to obtain a mortgage to satisfy some of the lenders' affordability criteria. This would be ironic given the government's intention to reduce the number of parents using the CMS.
The ability to obtain a new mortgage can be crucial in determining how a divorce case can be resolved. A client's mortgage raising capacity is a resource and it will impact on whether a property should be sold, transferred to one party or held on trust terms. It is therefore a crucial piece of information which needs to be provided so as to be able to advise fully on all the available options. You can obtain this information on your mortgage raising ability from a mortgage broker, or by contacting various lenders direct.
For further information on child maintenance and resolving financial matters upon a divorce or separation, please contact me or your usual Blake Morgan adviser.