Getting a Mortgage on Maternity Leave

Mortgage applications while on maternity leave can be more complicated than applications made when you are in full-time work.

However, while it may be trickier, it is not impossible to get a mortgage if you are taking time off while your baby is still very little.

Here, we look at how maternity leave can affect your ability to access some mortgages and how to apply for one if you want to buy a house during your extended time away from work.

Can you get a mortgage on maternity leave?

In short, yes, you can get a mortgage while on maternity leave. Only a handful of mortgage providers do not accept applications from those on parental leave.

However, taking a break to look after a new baby can mean you may not be able to access the same rates or loan amounts as you would do in full-time employment.

The reason being is some lenders do not make mortgage offers to applicants based on what their usual full-time income is.

Instead, they may base what they offer on maternity pay which is ordinarily lower than full-time income.

However, this is not always the case. Mortgage lenders, for the most part, do take a flexible approach to applications from those on maternity leave.

Do you have to declare a pregnancy on a mortgage application?

Mortgage lenders are legally not allowed to ask you if you are pregnant on your mortgage application.

However, it can be a good idea to let them know anyway.

The reason being is that they are more likely to take into account what your return to work income will be, which can sometimes result in a higher mortgage offer.

Mortgage lender considerations

Different lenders will have different eligibility requirements for you to meet before they offer you a mortgage while you are on maternity leave.

However, the most common that they consider in addition to your reduced income are:

Deposit

You’ll typically need at least 10%, but some lenders may ask for a higher amount, to take into account other aspects of your application, such as your return to work pay and how much disposable income you have to cover the mortgage repayments.

The higher your deposit, the more likely you will find a lender to loan you the full amount or a good rate you can afford.

That’s because they perceive the risk of loaning you a mortgage as far lower due to you having more equity in your house in the unfortunate event of a repossession.

How much you can borrow

A high number of lenders (including mainstream) will be happy to base the amount you can borrow on your ‘return to work’ income, if this can be verified by one of/all the following:

• Letter from your employer
• Last three months payslips / P60 tax statement
• Confirmation of your intention to return to full-time employment

So, when looking at a multiple of your salary (some will work on 4x salary, a few will go higher), they will use your full working income, rather than your maternity pay.

In addition, a number of lenders will want to check your affordability during maternity leave to make sure you can meet the repayments during this period.

Joint or household income

If you are applying for a joint mortgage with another person, a lender will take into consideration their income too.

As a result, they are more likely to lend you more.

They will also take into consideration any other income you have – perhaps from another property you own or investments you have made, which are not affected by you going on maternity leave.

Return to work income

Mortgage lenders, especially those who lend according to a person’s full time salary, will want to know that you intend to return to work in a full-time capacity.

If you do not, they could still lend to you, but will want to know what your potential future salary is.

By checking what your future income will be, they are ensuring that you pass affordability checks to make sure you can cover mortgage repayments.

Outgoings

Lenders like to take into account what your outgoings are to ensure you can meet the repayments on a mortgage.

As children are an expense, they will weigh up your increased outgoings as a result of having a new baby.

They will look at future childcare costs, amongst other recurring payments, to make sure you can afford a new mortgage – on either your reduced pay or your future pay.

How a mortgage broker can help

Mortgage brokers can be a highly effective way of improving your chances of a successful mortgage application as well as giving you access to the best rates and loan amounts – even when on maternity leave.

That’s because they know the lenders to approach given your circumstances and the eligibility requirements you meet when you are on reduced pay or otherwise.

Brokers will quickly know what your options are based on your current income and based on your future intentions for work.

They can then advise you appropriately and, ultimately, help you apply for the best mortgage for your own specific situation.

Mortgages and your post maternity leave plan

While some mortgage lenders will allow you to apply for a mortgage using your usual full time salary, it is still important to bear in mind what your plans are post maternity leave.

Many new parents decide to return to work in a part-time capacity, while some decide not to return at all until their children are at school.

As a result, it is important not to accept a mortgage which you cannot afford in future due to the cut in your household income.

Remember to consider your post-maternity leave plans to ensure that you can still cover mortgage payments comfortably.

Remortgaging on maternity leave

When you remortgage, you will likely find that your application is much like the process for applying for an entirely new mortgage product.

As a result, it may well be worth your while looking at new lenders to ensure you are still able to access the best rates – something that your current provider may not do if you are on maternity leave and therefore have a lower income.

All mortgage providers, however, will want to run affordability checks to ensure that you can cover repayments whether you are on maternity leave or back at work.

Some lenders, like with new mortgage applications from maternity leave applicants, will take into consideration your full time pay.

It is not necessary, therefore, to wait until you are back at work to remortgage.

This is yet another area where a specialist mortgage broker can help. They will know what lenders have a more flexible approach to these applicants, and advise you accordingly.

Get matched with a specialised mortgage broker today

The best way to improve your chances of being approved for a mortgage under these circumstances is to use a broker who specialises in maternity leave mortgage applications.

They will have the knowledge and experience to help you borrow the amount you require for your potential new home.

We offer a free, no obligation broker matching service that will put you in touch with the right broker for your needs, requirements and situation.

Call 0808 189 0463 or make an enquiry with us today so that you have the best chance of finding the right mortgage lender for you.