Although your decision to start a family may not seem like it’s anything to do with your mortgage provider, securing a home loan while you’re on maternity leave can be tricky. Because maternity leave generally has an impact on your earning potential, mortgage providers can see it as an impediment to paying back your loan. If they think that your maternity leave will have a big influence on your income, they may even deny your mortgage application altogether.
Luckily, although it may be more of a challenge to secure a loan while you’re on maternity leave, there are good deals out there to be found. All you need is a little expert advice and a bit of patience, and you’ll be holding the key to your very own front door in no time.
Maternity leave and income
In the vast majority of cases, women take a pay cut at some point during their maternity leave. Although some women may receive full pay for the first three months or so, this often drops down quickly after the initial period. Some are left with virtually no income by the time they go back to work.
If you apply for a mortgage when you’re on maternity leave, you may find that your lender asks for proof that you’re going back to work, and even for evidence of what your pay will be when you return to the office.
Other lenders could ask for proof of savings aside from the money for the deposit to supplement the shortfall in income while away from work. If you can’t provide the paperwork they need, they may decline to take your income into account when calculating your loan.
In some cases, lenders will only take your maternity leave income into account when assessing your application. As your salary during this period is likely to be a lot lower than when you worked full time, this could have an impact on the amount of money you can borrow and therefore on the house you can afford.
Explaining your circumstances
If you’re pregnant but not yet on maternity leave, or if you plan to become pregnant in the near future, you should tell your lender when applying for your loan. Your mortgage provider isn’t allowed to ask you outright if you are pregnant, as this could be interpreted as discrimination. What they will do is ask you if you expect your financial circumstances to change in the near future. If you are pregnant or planning to become pregnant this will obviously impact on your finances, so is something that should be disclosed.
“Although many lenders, as stated, will allow you to qualify for a mortgage loan based on your income before your maternity leave from work, it’s important you really evaluate your own finances.”
If you think you’ll struggle to meet your repayments while on maternity leave, or if you think your future earning power could be impacted, it’s a good idea to get expert financial advice before proceeding with your application.
To find out more about the different types of mortgage available, or for more information on applying for a mortgage while on maternity leave, take a look around our site or get in touch with a member of our team.
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Written by: Editorial Team