With over 700,000 babies born in the UK last year, you are not alone in wondering if you can get a mortgage on maternity leave. While it can be tricky to get a mortgage when you’re on maternity leave it is possible, if you are making a joint application with your partner then this can make the process of getting a mortgage accepted easier.
While on maternity leave if you apply for a mortgage it will affect your mortgage application as most lenders will assume that the applicant’s income will decrease while they are on maternity leave. If you are applying for a mortgage before you go on maternity leave this is also the case. If you have a salary of £28,000 this is likely to decrease considerably when you are on maternity leave for the duration of leave until you return to work.
There are lenders out there that are willing to take your full salary into account even when you are on maternity leave this will require you to get evidence from your employer on the following
- You are going back to work
- Your planned back to work date
- The Terms you will be going back to work on, if you are going back on reduced hours or your salary will change your affordability, lenders are not going to lend on your pre maternity income as it will change.
This evidence can be in the form of a reference or a letter confirming all of the above.
Telling your Lender about your pregnancy
If you are in the process of applying for a mortgage you will normally be asked if you can see your circumstances changing in the near future, if you are pregnant or about to go on maternity leave then it is best to be upfront with the lender about this as it will affect your ability to repay the mortgage and would also be classed as non-disclosure and potentially mortgage fraud this can have a big impact on your financial future so it is best to be totally honest and upfront about everything with your lender.
This is why it is vital for you to speak with a specialist advisor who knows lenders policies and which lenders to approach to ensure you have the best chance of getting your mortgage accepted.
Mortgage with partner on paternity leave
Maternity leave is usually a lot longer and will affect your finances for longer than the average length of paternity leave (2 weeks) however lenders will view paternity leave the same way in which they view maternity leave. It will have an impact on your salary and this will mean your salary will be smaller. Again it is best to be open and honest when applying if you know you will be taking paternity leave and your salary will be affected.
Sharing Maternity leave applying for a mortgage
If you are planning on finishing your parental leave early you can opt to share the remaining statutory maternity pay with your partner, this may be the case if the mother is on a higher salary and would prefer to go back to work to support the family financially. Again this will impact on your mortgage application and should be discussed with your specialist advisor who will help to obtain all of the relevant information needed to ensure you have the best chance of getting the mortgage offer you require.
How Much Can I Borrow On Maternity Leave
When you are on maternity leave the amount that you can borrow can vary. As normal, your credit history and deposit size will have an impact on your borrowing ability. Some lenders will not take any of your income into account if you are on maternity leave while some will take 50% of your normal salary into account and other will actually take 100% of your normal salary into account. Each lender is different when assessing affordability and have their own policies some will only lend three times your income where as others will lend up to 5 times your income. This is why it is best to speak with a specialist that has experience with this kind of mortgage and can help you to get the best deal and lower the risk of having your application declined or not being offered a big enough mortgage for your needs.
Self-employed on maternity leave
If you run a business, lenders will want to know what impact you going on maternity leave will have on your business and your income. Most banks will use your year-end account or SA302 to assess the level of lending you will be eligible for. Being pregnant or having a pregnant partner is likely to affect your future earnings and this will need to be assessed by the lender. Depending on your circumstances and level of involvement within the business it may be that your income won’t be affected if you have employees or the business can run without you being fully involved. If this is the case then the underwriter may take the view that your income will not change. It is best to seek specialist advice in these circumstances so you can gain the help of an experience self-employed mortgage broker that will be able to guide you.
What Deposit will I need?
The size of the deposit that you need to get a mortgage while on maternity leave will vary from lender to lender and also be solely based on your personal circumstances the larger the deposit you have the more you are likely to be able to borrow when you are on maternity leave, there will also be more lenders willing to consider you with a large deposit however there are still lenders that are willing to consider clients with a 5% deposit on maternity leave. This is why it is important to consult with a specialist who has specialist experience in this area to help you with a successful application. Get in touch with one of our specialists on 0800 368 8879 or fill in one of our enquiry forms.