Buying a home and having a child are both milestone events in their own right. Applying for a mortgage while expecting a child is a whole different ball game!
If you’re pregnant and are considering buying a home while on maternity leave, you probably have a host of questions in your mind. We’ve done the research to make it a bit easier for you to plan the application process.
Can you get a home loan while on maternity leave?
Lenders look at your overall financial situation when assessing your suitability for a loan. There are many factors that play into that, so it’s certainly possible to get a loan while on maternity leave. It comes down to whether you are able to make repayments during the period you are not working. For some people, this is achieved through paid parental leave payments, spousal income or savings.
Will pregnancy affect my mortgage application?
Getting a home loan while on maternity leave is possible, depending on your other circumstances. For instance, if you are applying with a partner, they will look at your income as a couple. Similarly, if you will have a continued source of income during your pregnancy and any time off, it may improve the lender’s confidence that you can repay the loan.
There are some specific documents requirements that lenders will ask you to fulfil in order to process your home loan application. Most lenders will ask for evidence of your employment and income. For this, some people provide:
- A letter from your employer outlining the terms of your maternity leave, highlighting the return date and your employment status when you rejoin work – will it be full time, part-time or casual.
- Payslips from the last three months before going on maternity leave
- Documents detailing your living expenses, including utilities, childcare and healthcare.
Tips when applying for mortgage during maternity leave
You can improve your chances of getting an approval on your home loan application while pregnant if you keep in mind some of these tips:
- Be realistic: Consider your current income and expenses carefully while zeroing on an amount to borrow. Think about how your life will be affected during maternity leave if you have to live on one income.
- Be ready with at least 20 per cent deposit: Most lenders will not approve a loan that exceeds 80 per cent of the property value. If you have a 20 per cent deposit in savings ready, your application has a greater chance of being approved. Plus, you might not have to pay lenders mortgage insurance.
- Shop around for the loan: It is never a good idea to submit a full application without talking to a lender. Let the lenders know that you’re on maternity leave as some lenders could reject your home loan application if they get to know this after you have submitted all documentation. A rejected loan application does not look good on your credit score.
- Talk to a mortgage broker: Mortgage brokers have a better idea about which lender is likely to accept your home loan application. Talking to one before can save you a lot of trouble and stress.
Can lenders ask me about my pregnancy?
It’s illegal for lenders to ask if you’re on maternity leave or pregnant when you apply for a mortgage, as this could be considered discriminatory under the Equality Act.
That being said, they also have an obligation to make sure you can repay your loan. One of the days they ensure this is by asking about your current and future financial situation.