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Can you get a mortgage on maternity leave?
Many people about to embark on parenthood often wonder about the practicality of maternity or paternity leave mortgages. The answer, unfortunately, is not always clear-cut. It may seem strange that maternity leave could have an impact on your mortgage application, but it can.
While lenders cannot discriminate based on pregnancy, they will still need to assess your affordability during maternity leave and once the baby arrives. For example, if you're planning on returning to work part-time, this will impact your income.
In general, if you have a good credit history, a steady income history, and employment to return to, you should be able to get a mortgage on maternity leave.
If you are considering taking out a mortgage while on maternity leave or paternity leave, you must speak to a professional before doing so. This will help you avoid any further complications down the line and help your mortgage applications succeed.
Do mortgage lenders take future childcare costs into account?
All lenders are different. Some UK mortgage lenders may be interested in future childcare costs and incorporate them into their affordability calculation.
Other mortgage lenders are more relaxed about this, and some are less so. In some cases, maternity leave or paternity leave may have an impact on your ability to get a mortgage. In others, it may not.
What is maternity leave income classed as?
Maternity pay (whether statutory maternity pay or a company package) is not classed as 'regular income,' so you'll either have to provide full-time employment references or else get your employer to confirm that they are expecting you back after maternity leave. Some lenders will also take into account whether this return date is variable.
Lenders will be interested in your income before you take maternity leave, as well as your potential income after you return to work. If this varies, they will ask for confirmation of the average figure you expect to take home.
What about paternity leave?
If you're taking paternity leave for childbirth, this will have the same impact as maternity leave.
Lenders are not allowed to discriminate when it comes to gender, so regardless of who is planning on staying at home after the baby arrives or taking time away from work, the same rules apply.
Can you remortgage on maternity leave?
Again, this is not always a straightforward question to answer. Some lenders may be more flexible than others regarding remortgages for women on maternity leave.
It is essential to speak to a mortgage advisor to find out exactly what your options are. Maternity leave mortgages can be tricky to navigate. Many women are not sure whether they will get a mortgage while they are on maternity leave. And, if they can get a mortgage, they may not be sure if they can remortgage during that time.
The good news is that, in most cases, you can still remortgage your home while on maternity or paternity leave. However, there are occasions when you may not get the same deal as if you were in full-time employment.
Does the length of time I take off maternity leave matter?
The answer to this question will depend on your mortgage lender. Some lenders may consider the length of time you are off work as part of their decision-making process.
If you are thinking about applying for a mortgage, it is always best to speak to your mortgage advisor first. This way, you can find out if they require additional information before deciding.
Self-employed maternity leave income
If you are self-employed or have a variable income that is difficult to quantify, you could run into problems even if your credit history is otherwise good.
Mortgage lenders will want assurance that you will be able to make mortgage repayments once your maternity leave is over, so having at least two years of company accounts might help to allay any fears they have.
Getting a mortgage on maternity leave as someone self-employed can be more complicated than with a normal salary and standard employment. We would recommend working with a mortgage advisor to help boost your mortgage application.
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Will maternity leave affect joint mortgages?
Joint mortgage applications are typically based on the income of both applicants, which may actually make it more straightforward when it comes to applying for a mortgage on maternity leave.
As long as your partner is in full-time employment, this will be a stronger indication of the family's ability to afford repayments in comparison to a single salary.
If you plan on applying for a joint mortgage with someone on maternity leave, then speak with a mortgage advisor first.
How much can I borrow on maternity leave?
How much you can borrow on maternity leave will depend on various factors. Lenders will generally consider your normal salary rather than your reduced income while on maternity leave.
However, this may not always be the case with women on maternity leave. Some lenders might be willing to lend more than others based on their own criteria.
Finding the right lender who is understanding of getting a mortgage whilst on maternity leave and paternity leave will give you a better chance of getting the right mortgage on your home.
Getting a mortgage on maternity leave with bad credit
With a bad credit record, you might worry about getting a mortgage on maternity leave. If you've had outstanding credit issues in the past, then you may find it more difficult to convince lenders to let you borrow money. With a poor credit record, mortgage providers may require additional information as part of their decision-making process.
However, if other factors are working in your favour, such as having your partner's income to support repayments, then mortgage providers might be willing to consider your application.
Informing your mortgage lender that you're on maternity leave
We advise that you tell your mortgage lender that you're on maternity leave and that you'll be receiving a reduced income for the duration of your maternity. This will allow them to accurately assess your ability to pay and whether or not they can offer you a mortgage deal.
If you don't inform your lender that you're on maternity leave, then they might make assumptions about your monthly income, which could impact whether or not they're willing to lend to you. If you fail to disclose that your income will be changing due to maternity leave or otherwise, this could be classed as non-disclosure.
Tips for getting a mortgage on maternity leave
Here are a few tips to help improve your chances of getting a mortgage on maternity leave:
- Engaging a broker who can provide independent mortgage advice will give you a better chance of being successful.
- Make sure to demonstrate your income and employment track record to potential lenders. This may involve spending some time organising paperwork such as your employment contract and payslips.
- If possible, try to wait until after your maternity leave has ended before applying for a mortgage or remortgaging so that your income is more clear-cut.
- You may want to consider whether or not your partner should be the primary applicant rather than yourself. This could improve your chances of a positive outcome as long as they are in full-time employment.
- When it comes to self-employed income, having two years of company accounts showing earnings might help get a mortgage approved.
- Make sure your credit rating is up to scratch, taking steps to improve it if necessary.
Should you use a mortgage broker?
Experienced mortgage advisors will understand which lenders are more accepting of expecting parents. They can also negotiate with your mortgage lender on your behalf, often securing the best mortgage deal for you.
Mortgage brokers are working in your interests and can make getting a mortgage approval more likely than if you approach a mortgage lender directly. Maternity leave mortgages can be less straightforward, so working with a mortgage broker is best.
Mortgage advisors can use their years of expertise and knowledge about the lending sector to negotiate on your behalf with banks and building societies. They will also know who is more likely to accept your application for a mortgage on maternity leave.
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Last updated 21 February 2024