Does The Child Support Agency consider Mortgage Payments as income?
By
HuutiMoney
This blog answers the question “Does The Child Support Agency consider Mortgage Payments as income?” The Child Support Agency (or Child Maintenance Agency) does not take mortgage payments into account when calculating your income. A higher income is preferable for getting Child Maintenance support.
Does The Child Support Agency consider Mortgage Payments as income?
The Child Maintenance Agency (Formerly known as the Child Support Agency) does not consider mortgage payments as income when calculating your entitlement. On the other hand some lenders such as HSBC can accept child support payments to cover mortgage installments.
When considering your application for Child Maintenance your yearly gross income amount is calculated. Benefits payments or pensions are also added to this gross income amount. After this the yearly figure for gross income is converted to a weekly rate.
So this gross income calculation does not include any housing expenses such as mortgage payments. You only need to declare any pension plans orany changes in your gross income over time
Based on your amount of weekly gross income, you are awarded one of the five Child Maintenance rates. These rates include the Nil Rate(below £7), Flat Rate(£7 to £100), Reduced Rate(£100.1 to 199.9), Basic Rate (£200 to £800)or Basic Plus Rate.(£800.1 to £3000)
Whichever rate is chosen for you will determine the level of your Child Maintenance Support.
Which mortgage lenders accept child maintenance as income?
HSBC, Barclays, Tesco Bank, Lloyds Banking Group and Natwest Group accept child maintenance benefits as income..If you want to include child support in your mortgage application as income, most of them require you to have a formal payment agreement.
Banks can accept Child Maintenance as collateral on your mortgage loan repayment.HSBC and Barclays mortgage agreements both approve of Child Maintenance funds as income.
Banks other than these ones need to be shown a court order (approving your child maintenance) , a CMS agreement, or proof of your last three months of payments before they approve your case. These records with your bank need to be updated regularly until the mortgage is fully paid off.
3 months of bank statements are needed by the bank along with the above requirements.
What other factors play a role in applying for a child support loan?
The most important aspect the lender considers before granting your mortgage loan is whether you will be able to pay it off on time and in full.. If you are using child support as income in your mortgage application, the bank will look at how long you will receive it for.
How long your Child Maintenance payments continue to be made depends on how many years your child has left before turning 18 years of age.. You will also need to have a stable and high level of gross income. They also want to find out if you will still be able to pay off their mortgage even after the Child Maintenance payments have been completed (if your child is above 13 or 14 years)
What legal actions can the Child Maintenance Service take to make me pay off my debt?
The Child Maintenance Service will obtain an Deduction from Earnings Order from the court to take away the arrears from your salary. CMS can also withdraw the money from your bank accounts . It can also apply for a court liability order to send bailiffs to your property or to sell off your primary residence for CMS debt recovery.
In case you fail to pay off your arrears with the Child Maintenance Service they may decide to deduct the arrears from your salary (with your employer’s consent)
If you are not working the CMS might attempt to withdraw money from your bank account. CMS can take out :
- Regular payments deducted periodically
- Lump sum payments
- CMS can also choose to withdraw funds from corporate accounts
In case the Child Maintenance Service is unable to recover your debts from your bank accounts it may get a liability order issued against you by requesting the court. This means that now the Child Maintenance Service can obtain a court order to sell off your home or send bailiffs to your property to sell off your belongings. These methods are highly likely to end up ensuring the recovery of CMS arrears
What happens when the Child Maintenance Service takes money from my wages?
A Deduction from Earnings Order is used by the Child Maintenance Service to take money from your wages in case you fail to make your CMS payments on time. Your employer will deduce the amount of the DEO from your net earnings and pay it back to the Child Maintenance Service.
A DEO could be issued in case you have failed to make your payments on time, you have not made the complete payment or have refused to pay back your arrears of CMS payments.
The DEO could also be issued if you are paying late and have not agreed with the Child Maintenance Service on a repayment schedule.
The CMS will normally add a fulfillment fee of £50 to what you owe. In some situations, you don’t have to pay any additional fees,.
CMS can agree to let you set up a Direct Debit account to make the repayments and not choose to serve the Deduction From Earnings Order (if you have paid on time in the past).
For this result you also need to respond to the Child Maintenance Service’s “last warning notification” for nonpayment of your deposits on time. If you delay or cannot agree to a repayment schedule with CMS the DEO will be sought in your case.
The Child Maintenance agency DEO should not take away more than 40% of your net income. Your employer can be sued in court if they fail to pay back the unreturned CMS money from your wages.
Under which circumstances can the Child Maintenance Service cancel a DEO?
The Child Maintenance Service can cancel a DEO under the following circumstances:
- The order is inapplicable. This could be the case if you continuously keep switching jobs or your net earnings from your current job are insufficient to pay off your CMS debt.
- The Child Maintenance Service has found a better method of taking back your missed CMS payments such as through deductions from your bank account.
- You voluntarily agree to a different method for repaying your CMS amount so they feel it is right to cancel the Deduction from Earnings Order.
In case you are unsatisfied with an income order deduction, you need to:
- offer reasonable refunds
- keep track of regular child maintenance payments
What happens to my CMS repayments if my salary increases?
The deduction amount on your paycheck (to your employer) needs to be edited if the payable amount remaining increases. This could be the case if the following change of circumstances occur:
- Your salary gets reduced by 25% or more
- You have had another child with your new spouse
You need to inform the Child Maintanance Service of these changes and request them to edit the earning order deduction. You may also decide to appeal the payroll deduction entirely. This appeal can only be made within 28 days of the issuance of the DEO
What information do I need to provide the Child Maintenance Service when I decide to switch jobs?
You need to provide the following information to the Child Maintenance Service within 7 days of starting a new job:
- The name and address of your new employer.
- Your net earnings on this new job.
- Information about the workplace where you are employed. Its activities and industry sector.
- The type of work you do on the job.
- Your payroll number.
Conclusion
This blog post addressed the question “Does The Child Support Agency consider Mortgage Payments as income?”The Child Support Agency does not take mortgage payments into account as your credit situation does not influence the CSA’s decision for granting allowances for your children. If you go into debt, the situation may be different.
Please feel free to comment on the content or ask any questions in the comments section below :
Frequently Asked Questions (FAQs) : Does The Child Support Agency Take Mortgage Payments Into Account?
In which situations does the Child Support Agency consider you to be the parent of a child?
The Child Support Agency considers you to be the parent of a child if the following apply:
- You were the civil partner of the child or had been married to the child’s mother at any time after the conception of the child.
- Your name is mentioned on the child’s birth certificate as a parent or guardian
- A DNA test proves you to be the child’s parent
- The child was legally adopted by you (and your spouse)
- Your name is mentioned on the parental order of a child who was born to a surrogate mother.
What happens if I am able to prove that I was not the legal parent of a child ?
In this case the Child Maintenance Agency may choose to:
- Refund the amount of payments which you have deposited with the agency (for the child) since the time you informed them that the child is actually not yours.
- Request the co-parent of the child to refund your child maintenance contributions
- Arrange for a refund to any DNA test you have arranged for through the Child Maintenance Service
- Reimburse your Child Maintenance payments to an account for maintenance costs for another child you are also making the same payments for.
Citations
House of Commons Library Child Maintenance : Calculations, variations and income
House of Commons Work and Pensions Committee Child Maintenance Service Report
How We Work Out Child Maintenance by the Child Maintenance Service