If you’re expecting a new baby or have just welcomed a new addition to the family but are concerned about the implications of securing a mortgage while on maternity or parental leave, then you’ve come to the right place. This article aims to explore everything you’ll need to consider when buying a new property while on parental leave.
How Does Being on Maternity Leave Affect Applying for a Mortgage?
Being on maternity or parental leave can impact your mortgage eligibility, as it’s expected that your income will decrease during this time. This can be especially challenging if you typically rely on overtime or bonuses. Lenders need to understand your income and circumstances outside of parental leave; therefore, they will assess your pre-maternity leave income, your expected return-to-work income and date, and they may also require a letter from your employer.
Can You Get a Mortgage While on Parental Leave?
Yes, you can secure a mortgage while on parental leave. Lenders will typically consider your pre-maternity leave income and require confirmation of your expected income after your leave ends.
I’m Self-Employed and on Maternity Leave, What Are My Mortgage Options?
If you’re self-employed and on maternity leave, obtaining a mortgage may be more complicated, but options are still available. Lenders often consider your pre-leave income and anticipated future earnings, so be prepared to provide profit and loss statements as well as evidence of expected income. Consulting a mortgage broker with experience in parental leave mortgages, such as The Mortgage Pod, would be a wise choice.
What Is Required to Apply for a Mortgage While on Maternity Leave?
To apply for a mortgage while on maternity leave, you’ll likely need to provide:
- Pre-leave payslips and P60s to demonstrate your normal income.
- Confirmation of your intentions post-parental leave:
- Some lenders may accept this verbally.
- Others will require a letter from your employer confirming your return-to-work date and any changes to your employment contract, such as reduced hours.
How Much Can I Borrow Whilst on Maternity Leave?
While on parental leave, you can typically borrow 4 to 5 times your income, depending on the lender’s criteria. Mortgage lenders will consider your pre-parental leave earnings and any expected changes in income after your return.
I’m Returning to Work from Maternity Leave Part-Time, How Will This Impact My Mortgage?
If you’re returning to work part-time, it’s crucial to plan ahead and be transparent with your mortgage adviser. Changes in your working hours can affect your income, which in turn impacts your mortgage eligibility and the type of mortgage product that’s best suited for your circumstances.
Can I Remortgage While on Parental Leave?
Remortgaging during parental leave is akin to applying for a new mortgage. Lenders will require proof of your return to work and need to understand any changes to your employment terms. If your income has changed, a product transfer mortgage may be a suitable option.
What Other Considerations Are There for Parental Leave Mortgages?
Nursery Fees and Childcare Costs
You’ll need to factor in any forecasted childcare or nursery fees when budgeting for mortgage repayments, as lenders will assess your affordability with these costs in mind. You can read our guide on How Will Nursery Fees Impact My Mortgage Options here.
Changes in Financial Circumstances
Be aware of how your income may change after your leave. If your hours and therefore income are to reduce, consider this when establishing a budget with your mortgage broker.
Emergency Fund
We always recommend maintaining an emergency fund for unexpected expenses, providing financial stability as you adapt to new potential childcare costs.
Can The Mortgage Pod Help Me Secure a Maternity Leave Mortgage?
Yes, The Mortgage Pod can certainly assist you in securing a mortgage while on maternity leave. With over 35 years of combined experience in the mortgage and property market, our expert team understands the unique challenges you may face. We provide tailored advice to help you find the best mortgage options available. Get Started Here.
FAQ’s
Can I get a mortgage while on maternity or parental leave?
Yes, you can get a mortgage while on parental leave. Lenders typically consider your pre-leave income and need to understand your plans for returning to work, so transparency is essential.
Do I Need to Tell My Mortgage Broker If I’m About to Go on Maternity Leave?
Yes, it’s important to inform your mortgage broker and lender if you’re considering applying for a mortgage and are about to experience a significant change in your circumstances, such as an increased number of financial dependents or a change in income.
How does parental leave affect my mortgage eligibility?
Lenders typically assess your financial situation based on your pre-parental leave income. It’s essential to discuss your circumstances with your mortgage broker to find the best solution.
Can I remortgage while on parental leave?
Yes, remortgaging during parental leave is possible. You will need to provide proof of your return to work and details about any changes to your employment terms.
