If you’re on or due to start maternity leave, you might be wondering how this will affect your mortgage chances. By the end of this maternity leave guide, you will understand what your mortgage options are and what you need to do prior to or while on maternity leave.
Maternity leave mortgage
As a company, we have over 30 years of experience with maternity leave mortgages. Mortgage providers have different criteria for what they require and our job is to match your profession with the lender that will accept your mortgage application.
Is it possible to get mortgage approval when on maternity leave?
Yes, it is definitely possible to get a mortgage approved when on maternity leave. So, you don’t necessarily have to delay your move into home ownership.
However, you need to be aware that many lenders will be cautious about lending to you. As such, it is wise to use the services of a mortgage broker such as ourselves as we will put you in contact with those mortgage lenders who will be more open to giving you a mortgage.
How does maternity leave affect my chances of getting a mortgage?
As we suggested, it is possible to get a mortgage when on maternity leave. The same applies if you are a father looking to take paternity leave.
When assessing mortgage applications, mortgage lenders always look at the applicant’s affordability. This is one of the things that will be taken into account while you are on maternity leave.
If your chosen lender thinks you’ll be able to make your expected mortgage repayments after assessing your affordability (based on your income and your spending), you are likely to have your application for a mortgage approved.
Your mortgage chances will be further improved if the lender takes your normal salary into account rather than the reduced income of your maternity pay.
So far so good.
But as some lenders will base your income solely on your Statutory Maternity Pay (SMP), you may run into problems when trying to get a mortgage. This is because your maternity pay will likely be a lot less than your regular income.
What if I am self-employed?
If you’re self-employed and on maternity leave, your chances of getting a mortgage can be even less as you won’t qualify for Statutory Maternity Pay unless you also have a separate job.
Some lenders will also take your future childcare costs into consideration and this can impact your affordability rating.
So, while you may be approved for a mortgage in some circumstances, you might run into issues if you choose the wrong lender. To improve your mortgage chances, get in touch with our team and we will find the lender that is right for your situation while you’re on maternity leave.
Should I tell the mortgage lender that I’m on maternity leave?
If you’re worried about your mortgage chances, you might be tempted to hide the fact that you’re on maternity leave. But if you do tell a lie, you do this at your own risk as your mortgage application will be rejected if the lender spots any false information.
Our advice? Always tell the truth! The lender will already notice your reduced income when looking at your payslips so it’s unwise to hide the fact that you’re on maternity leave.
Even if you’re a few weeks away from maternity leave and on your normal salary you will still be expected to declare any circumstances that could affect your future ability to repay a mortgage. As such, you need to be honest about your planned maternity leave on your application. This is the wisest thing to do as if you neglect to mention the fact that you will be on leave, you may end up with a mortgage that you later struggle to repay.
Maternity leave doesn’t automatically rule out your chances of mortgage approval as there are things you can do to improve your chances of getting a mortgage. So, rather than bend the truth, follow the steps that we outline below.
How does paternity leave affect my chances of getting a mortgage?
Although paternity leave can mean that your income can reduce, Most lenders will not take the reduction in income into consideration as it will usually be for a reduced period of time.
It is our observation and experience that it is always best to be upfront with your mortgage provider if you plan to take maternity or paternity leave.
How can I improve my chances of getting a mortgage while on maternity leave?
Getting a mortgage on maternity leave is possible.
1. Find a suited mortgage lender
The first thing you can do to improve your chances is to find UK mortgage lenders that are willing to consider your mortgage application. The best way to do this is to use the services of a mortgage broker, such as ourselves. We know which lenders will be happy to consider your normal salary when you’re on maternity leave so get in touch with our team for more information on these.
2. Gather proof of income
Another way to improve your chances of mortgage approval is to prove to the lender that your future income will depend on your usual full-time salary and not the lower income of your maternity pay. You can do this by providing a letter from your employer confirming…
- The date you will return to full-time employment
- Your hourly rate of pay and contracted hours
Of course, your contract might change when you return to work. You might need to work part-time hours instead of full-time, for example, due to the needs of your child. This doesn’t mean your chances of a mortgage will be reduced but the lender will likely limit the amount you are allowed to borrow due to the change in your approximate annual income.
How much can I borrow when getting a mortgage on maternity leave?
The amount you can borrow will depend on the lender criteria and your financial circumstances.
Some lenders will calculate the amount you can borrow based on your full-time salary while others will only take your lower maternity pay into account.
Improve your chances of borrowing more
To improve your chances of borrowing more, you should look for those lenders that typically consider a full-time salary rather than maternity leave income when assessing mortgage applications.
Full-time or part-time salary
If you plan to go back to work part-time rather than full-time, you will also need to look for the most suitable lender, but you need to be aware that your borrowing potential will be reduced because of your decreased income.
If you are making a joint mortgage application while on maternity leave, then your borrowing chances will be increased. This is because the lender will have more than one income to consider when deciding how much to lend to you.
Borrowing amount summary
So, how much will you be able to borrow? Well, that depends on how much you earn.
Some lenders will calculate the amount of your mortgage based on 3 times your household income while others will lend you an amount up to 5 times your household income.
To increase your borrowing potential, you should use the services of a mortgage broker to find a mortgage provider that will offer you the right amount of money you need for your dream home.
Other factors that can affect how much you can borrow from mortgage lenders
The amount you can borrow isn’t only based on your income and maternity leave. Other factors will be taken into account by the lender when they consider how much to offer you on a new mortgage deal.
This means you will be offered a mortgage based on…
- How much deposit you are able to put down
- Your expenditure, including household costs, debts, and unnecessary spending
- Your credit history
- Your extra income, such as the invested money you have put into a savings account
You can increase your borrowing potential by putting down a larger deposit, reducing your expenses, and improving your credit rating. To learn more, speak to an exclusive mortgage expert at YesCanDo Money today.
How much deposit do I need for a mortgage on maternity leave?
So how much deposit do you need to buy a house, the minimum deposit size you will be asked for will likely be 10-15% although some lenders may consider less than this.
It’s been our experience that the more you can put down as a deposit, the better. This is because the loan-to-value ratio will be higher and therefore the amount you are eligible to borrow may be increased and you may be able to access better mortgage deals.
The higher the deposit the more options you will have
In some cases, you might be asked to put down a higher deposit by the lender.
This will depend on the lender criteria and how much of a risk they think they are taking when lending to you. You may be able to get a mortgage with a lower deposit if you’re a low-risk borrower but if you are high risk, perhaps because you have bad credit or have an unstable income, you may be asked to put down a larger deposit.
Seek advice for a better chance of getting your mortgage approved
But no matter your circumstances, our specialist finance professionals are here to help. We can improve your chances of securing a mortgage deal at a competitive rate as we can access deals from the majority of mortgage providers in the UK. Get in touch with us if you would like to learn more and we will provide mortgage advice that is tailored to you.
Speak to a specialist mortgage broker at YesCanDo Money
As mortgage brokers, we have a lot of experience in arranging mortgages when people are on maternity leave. The bottom line is that it is nearly always possible. Each mortgage lender has a different attitude and underwriting criteria. Therefore our mortgage advisers are able to help you as they will know which lender best suits your profession and the maternity evidence that is needed.
If you’re looking to get a mortgage on maternity leave, get in touch with our expert team. Finding the right mortgage lender is vital, not only to improve your chances of finding a mortgage but to make sure you get access to the most competitive deals too.
At YesCanDo Money, our experienced mortgage advisers have a proven track record of helping new parents and parents-to-be, so get in touch with us for the right mortgage advice and support.
Your appointed mortgage introducer will also manage every aspect of your mortgage application, giving you more time to relax and manage the needs of your child while you are on maternity leave.
All the advisors at YesCanDo have the experience to support you, so to learn more, get in touch with our team of mortgage brokers and begin your journey towards a great new mortgage deal with us.
This guide is as it says a guide, however, it does not fully constitute financial advice. Call our advisors or alternatively message us on WhatsApp chat to our team. We are an established online mortgage advisor who will give sound advice personalised to your circumstances.
Getting a mortgage on maternity leave FAQS
Do you have any other questions about getting a mortgage on maternity leave? If so, you may find the answers you need below. If we still haven’t covered the answers you’re looking for, an online mortgage advisor at YesCanDo Money will gladly give you the mortgage advice you need, so ring us or contact us about your mortgage online if you need any further information.
Is it possible to remortgage while on maternity leave?
Yes! Remortgaging while on maternity leave is certainly possible but it is wise to find a mortgage provider that will consider your application based on your full-time income rather than your maternity leave income.
You may be able to remortgage if you’re going back to work part-time too provided your return to work income is enough to cover your mortgage payments.
Is there a difference between maternity leave and paternity leave?
Mothers have more parental leave than fathers as they are permitted to start maternity leave before their due date. The earliest paternity leave can start is on the date of the child’s birth.
You probably understand these differences already as they may have been explained to you by your doctor or employer.
But do lenders take these differences in parental leave into account when deciding mortgage approvals?
Not usually as most mortgage providers will follow the same guidelines when it comes to maternity or paternity leave. These guidelines will be based on your future income, the duration of your time off work, and other factors related to the lender’s criteria.
Is it hard to get a mortgage on maternity leave if I am self-employed?
Maternity leave mortgages are possible for those who are self-employed although your mortgage eligibility will depend on how much your income will be affected while you are off work.
If your business won’t function while you’re not there, this will negatively affect your income and so your chances of mortgage approval may be reduced. But if you have employees that can keep your business running, you should still be able to make an income and this will improve your mortgage chances.
Not every lender will consider self-employed applicants, regardless of maternity leave. However, there are many specialist lenders that will as long as you can provide evidence of a stable income.
With only a few mortgage providers lending to self-employed applicants, get in touch with a mortgage advisor at YesCanDo for the right advice about your available options.
Can I get a mortgage on maternity leave if I have bad credit?
Maternity leave is sometimes a sign of financial uncertainty for UK banks and building societies and so too is bad credit. If you’re an applicant on maternity leave with a poor credit history, then your chances of getting a mortgage will be reduced.
However, this doesn’t mean your chances of mortgage approval are zero.
Most lenders will take the reasons behind your poor credit into account. If your credit rating is low because of a few unpaid bills from several years ago, your application for a mortgage is more likely to be accepted than that of somebody whose credit rating has been affected by bankruptcy or a county court judgement.
Whatever the reasons behind your bad credit, contact an online mortgage advisor at YesCanDo Money for the right advice and support. Some lenders specialise in bad credit mortgages and a mortgage advisor at YesCanDo Money can point you in the direction of these.