If you are currently on maternity or if you are due to go on maternity leave, obtaining a mortgage can be a tricky process. Here are some things you need to know.
It is a big decision to know when it’s the right time for you to go back to work and you may not have thought about this before going on maternity leave. However, this is something you should consider thinking about before applying for a mortgage as this will be asked by the lender.
The majority of employers will pay you the standard statutory maternity pay in place of your normal employed income during your maternity leave and so as your income reduce, so to can the amount you wish to borrow (potentially!).
But fret not, if you intend to return to work in the same role, same hours and same pay some lenders will use your full pre-maternity income for affordability purposes.
Lenders are likely to insist on some kind of proof in the form of a ‘return to work’ letter from your employer confirming your return date, your hours and your pay. Some lenders will accept this directly from you.
You will need to disclose if there will be any childcare costs and these will be treated as committed expenditure as part of the lenders affordability assessment. If, however, you have say grandparents providing the childcare for free then no deductions need to be made.
One thing to consider is if you were previously working full-time but then decide to return part-time this will in turn affect your salary and in this case the lender will use your new part-time return to work salary.
Also, another thing to consider is that having children brings more costs to the household and more mouths to feed, the lender may lend less when there are financial dependents in the household.
Finally, it’s important to add that all of the above applies to all types of parental leave.
As a mortgage professional I am here to help and make the mortgage process as easy and stress free as possible. If you have any queries about obtaining a mortgage when on maternity leave then feel free to get in touch.
