From your salary to your spending and your credit rating to your employment history, there are lots of factors that can determine your chances of getting a mortgage. In fact, almost anything that affects your finances will influence your application. And as maternity and paternity leave generally have a negative impact on income, it’s important to consider the timing of your application before you begin your hunt for a new home.
Why do maternity and paternity leave affect a mortgage application?
In general, your income will drop if you go on maternity or paternity leave. The longer the leave lasts, the more your salary is likely to be affected. As your income will be reduced while you’re on maternity or paternity leave, some lenders may question your ability to repay your loan and may be reluctant to offer you the full amount you’re asking for.
If you’re not yet on maternity or paternity leave but are expecting a baby at some point soon, your chosen lender may not necessarily take your leave into account when calculating your mortgage. However if you’re already on leave, your reduced income will probably be a factor in your application. In some cases, a lender may ask for a letter from your employer guaranteeing your return to work and confirming your salary. Some lenders ask that your returning to work is within a month of your application. Some give you three months and others don’t place time restrictions on your maternity or paternity leave.
Variations between lenders
Different lenders have very different policies when it comes to maternity and paternity leave. In some cases, a lender won’t even ask if you’re on leave or are planning to go on leave in the near future. In other cases you’ll be expected to disclose your maternity or paternity plans to your mortgage provider.
As @EveryInvestor points out, “Policies vary fairly significantly between lenders but importantly this does mean that options are likely to be available whatever your position.” So if one lender isn’t happy about your maternity or paternity leave or won’t consider you because your return to work isn’t within their time limit, it’s probable you’ll be able to find another mortgage provider who will consider your application.
Getting a mortgage during paternity or maternity leave
If you’re currently on leave, or if you think you will be during your mortgage application, it’s a good idea to get expert advice before talking to your lender. An independent financial advisor will be able to help you prepare your application and will guide you through the process, giving you the best chance of getting the loan you need.
To find out more about applying for a mortgage, or to speak to one of the expert members of our team, get in touch today.
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Written by: Editorial Team