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Getting a mortgage on maternity leave

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HomeMortgage Help GuidesGetting a mortgage on maternity leave

Getting a mortgage on maternity leave

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Last reviewed on 30th December 2021

Getting a mortgage on maternity leave can be a difficult task. As specialist mortgage advisors, we deal with enquiries that sometimes don’t fit the norm. Some mortgage lenders may view applicants on maternity leave as high-risk, but you certainly shouldn’t let this stop you from exploring your options.

If there’s a mortgage out there for you, we’ll find it and we’ll do our very best to make it happen. Maternity leave mortgages are possible, as long as your application is well-prepared and placed with a suitable lender.

Can I get a mortgage on maternity leave?

Maternity leave can affect your chances of being approved for a mortgage. Lenders carry out affordability assessments mainly based on income. Maternity leave usually entails a decrease in income and can therefore cause problems.

Let’s say for example your income is £40,000 a year. Lenders typically make income assessments based on that figure. As your income may decrease because of maternity leave, lenders will make assessments on your reduced income figure.

Lower-income can make mortgage approval difficult with many lenders, simply because of affordability. Lenders need to see that there’s enough income to cover a mortgage and that’s why maternity leave can pose problems. Nonetheless, there are ways to demonstrate that you can afford to repay a mortgage.

Should I tell my lender that I’m on maternity leave?

Always be honest with your advisor and your lender. Being on maternity leave doesn’t mean you won’t get a mortgage, but providing false information will guarantee you to be declined. Most lenders also ask for evidence of payslips, which may show maternity pay as an income.

On mortgage applications, you’ll be asked if there are any circumstances that may affect your ability to repay a mortgage. Maternity leave is considered a circumstance that can affect your ability to repay a mortgage. This doesn’t mean you’ll automatically be declined, as there are certain steps you can take to improve your application.

How to get a mortgage on maternity leave

Not every lender will approve mortgages when on maternity leave, but there are lenders that will. It’s important to show lenders that although there’s a decrease in your salary, it’s just for a short period of time. Furthermore, you’ll soon be earning your usual amount of income.

By doing this, it gives lenders confidence when assessing your affordability. We’ve outlined a few ways to convince lenders to assess your usual income and not your income while on maternity leave.

Get evidence from your employer in the form of a letter or a reference outlining:

  • You still have employment once your maternity leave ends
  • The approximate dates you’ll return to full-time employment
  • Any changes to your employment once you return
  • Your hourly rate and contracted hours once you return

If your employer can’t provide this information, then you could struggle with getting a mortgage. If your employer can provide this information but confirms that you’ll be on reduced hours, it will have a negative impact on your mortgage chances.

ask a mortgage broker

How much can I borrow on maternity leave?

The amount you can borrow will vary and depends on the lender. For example, some lenders will calculate affordability based on your normal salary. Other lenders may only consider part of your salary and in some cases, lenders won’t consider any income, as they may feel your employment has come to an end.

The first step is to locate lenders that will assess you on your normal salary and not your reduced maternity leave income. The next step is to check your lender’s criteria. For instance, some lenders will lend up to five times your income, with other lenders only lending up to three times.

Finding a lender that will assess your normal salary along with lending up to five times your income, can ensure you’ll get the maximum amount you can borrow if approved. This also depends on other factors such as your credit score and your deposit amount.

Can I get a joint mortgage?

If there are two applicants applying for a property, then lenders will make assessments on both applicants. This is known as a joint mortgage. In some cases, one applicant may meet the affordability on their own. In cases such as these, maternity leave can become irrelevant.

On the other hand, paternity leave may also impact a mortgage application. That being said, it is rare as the time frame for paternity leave is usually a lot less.

Which lenders are suitable for maternity leave?

Now you know what to look for in a lender, how can you find one? It’s very difficult trying to guess how lenders make assessments and how much they’ll lend. For a mortgage advisor, it’s quite a simple task. This is because mortgage advisors are placing mortgages with lenders on a daily basis. The experience of placing mortgages enables brokers to understand individual lender criteria.

Lenders vary and so do applications. You may be recently self-employed or you may have bad credit. Only a few lenders will entertain such applications. Depending on your individual circumstances, an advisor can locate certain lenders that you’re likely to qualify with.

Advisors would also avoid lenders that are likely to decline you based on the information provided. Remember, affordability is only one part of your entire application. There are a number of other factors lenders will assess.

What if I’m self-employed and have taken maternity leave?

If you’re self-employed, getting a mortgage is possible for applicants on maternity leave. Lenders will need to understand how maternity leave will affect your business and base their affordability assessments on income via your accounts. This is typically in the form of an SA302.

As accounts are usually filed for previous tax years, lenders probably won’t be aware that you’ll be going on maternity leave, but be sure to declare this.

Lenders can assess how maternity leave may impact your business. You might have employees and therefore going on maternity leave will have little or no impact. If you’re a sole trader, then maternity leave may have a significant impact on any income generated.

Advisors can demonstrate to underwriters that your business won’t be affected by maternity leave if indeed that is the case. Each lender is different, so it does depend on the lender in question and your financial circumstances.

My credit score isn’t great

In all honesty, it can be difficult to secure a mortgage on maternity leave with bad credit. This is because the lenders that will consider your full salary figure as an income, don’t typically approve applications with bad credit. Nonetheless, a mortgage with bad credit is possible.

We’d highly advise you to speak to an advisor, as adverse credit applicants are assessed on a case by case basis. There are specialist lenders that can approve mortgages with severe adverse credit issues such as bankruptcy and IVAs.

As you have bad credit and are on maternity leave, the possibility of getting a mortgage will improve if you have a deposit of at least 15-20%.

Speak to a specialist mortgage advisor

If you need a mortgage on maternity leave, you can make an enquiry and a specialist will contact you.

Mortgages always vary, so without understanding your circumstances, it’s difficult to know what the best route to a mortgage would be. Speak to an advisor to help you get started.

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About the author

Mortgage Advisor | More Articles

Martin is a senior mortgage advisor and has held a CeMAP qualification for over 15 years while also completing an MBA in Global Banking & Finance.