Getting a Mortgage on Maternity Leave
Welcoming a baby into the world is pure joy, but it also brings some considerations like whether your current housing space is sufficient. For many parents to be, maternity leave introduces an added layer of financial uncertainty, which feels daunting when exploring mortgage options.
Despite it being true that some lenders approach applications from those on maternity leave with caution, getting a mortgage, or remortgaging for that matter, during this time is far from impossible. With the right guidance and prep, you’re sure to find options which align with your needs and budget.
In this guide, we’ll look into how maternity leave influences your mortgage eligibility, what factors lenders consider, and steps you can take to secure an affordable deal tailored to your circumstances. We will cover:
How does being on maternity leave affect your mortgage application?
Should you tell your lender if you’re pregnant or going on maternity leave?
How much can you borrow for a mortgage if you’re on maternity leave?
Can I get a mortgage on maternity leave if I have bad credit?
How does being on maternity leave affect your mortgage application?
Taking maternity leave means a temporary reduction in your income, therefore impacting how lenders assess your mortgage application. While some lenders consider your full pre-maternity wage, many will focus on your reduced maternity pay instead.
In this context, your decreased income becomes the basis for their affordability calculations. And, since lenders prioritise ensuring you can comfortably meet your repayments, the lower maternity pay effectively limits the amount you can borrow, with certain lenders declining to offer a mortgage altogether in some cases.
Can you get a mortgage if you’re on maternity leave?
Yes, getting a mortgage while on maternity leave is entirely possible, though it involves a few extra challenges as opposed to applying while working full time. Some lenders will in fact reject applications from those on maternity leave, but many are more accommodating.
What they’ll want is proof of your intention to return to work, the date you plan to do so, and confirmation of your full salary upon your return. If you’re self-employed, lenders will ask for additional evidence such as three years’ worth of business accounts, SA302 forms, or tax year overviews from HMRC, as well as projections of future earnings to make sure your income will remain stable during and after maternity leave.
Given this aspect, choosing the right lender is integral to a successful application. It’s important you search for lenders who are understanding of maternity leave circumstances and won’t impose unnecessary restrictions or dismiss your application outright.
Should you tell your lender if you’re pregnant or going on maternity leave?
Yes, you have to inform your lender about any significant changes in your circumstances, such as pregnancy or maternity leave, as these could affect your ability to repay the mortgage. Being transparent is not just a legal obligation, but also a step which ensures you get a deal that fits your situation.
Similarly, honesty implies you’ll avoid potential complications later too. This is because if you withhold this information, it will still come to light during the underwriting process regardless, through checks like reviewing recent payslips or other financial documents.
As such, failing to disclose such details will lead to delays, added stress, or even the withdrawal of your mortgage offer. Whereas, by being upfront, you guarantee a smoother application process and reduce the risk of surprises down the line.
How much can you borrow for a mortgage on maternity leave?
The amount you can borrow for a mortgage during maternity leave varies widely depending on the lender. Some lenders base their calculations on a portion of your proven income, while others won’t consider your income at all. However, there are lenders who assess your borrowing potential based on your normal full-time wage, which significantly increases your options.
Ideally, you should seek out lenders who allow you to declare your full income without imposing restrictive conditions. Most lenders offer loans equivalent to 4 times your income, while some extend to 5 times or even more in certain instances.
To get a clearer picture of your borrowing capacity, feel free to try our mortgage calculator.
How do joint mortgages work during maternity leave?
When applying for a joint mortgage, lenders consider the combined income of both applicants to determine how much they’re willing to lend. If your partner or spouse plans to continue working after the baby is born, then their income simplifies the process.
In select situations, you’ll even qualify based on your partner’s income alone. What this gives is flexibility in that you’ll be able to explore options for after your maternity leave. For example, you could choose to reduce your working hours to spend more time caring for your baby, knowing that your partner’s income will support the mortgage repayments.
Can I get a mortgage on maternity leave if I have bad credit?
Securing a mortgage while on maternity leave is more difficult if you also have a poor credit score. Lenders are generally cautious in such cases, and those willing to base lending on your full pre-maternity income are less likely to offer mortgages to applicants with bad credit.
Although, not all credit issues are treated equally. Lenders consider factors like the severity of your credit problems, how long ago they occurred, and the steps you’ve since taken to improve your financial situation. A larger deposit will also work in your favour, and there are specialist lenders who focus on bad credit mortgages out there.
If you want to get an idea of your current financial standing before you apply for a mortgage, you should use our free credit check tool (£14.99 per month after the free 30-day trial). Using it will help you to see any possible mistakes or fraudulent activity on your profile, so you can deal with such problems. The trial and subscription can be cancelled at any time.
How does maternity leave affect remortgaging?
Remortgaging during maternity leave follows a process similar to applying for a new mortgage. Specifically, if you’re switching to a different lender, they’ll perform an affordability assessment to confirm that you can manage the repayments. Yet, as said, being on maternity leave lowers your perceived affordability, making it an obstacle to securing a new deal.
Most lenders will require proof that you intend to return to work with the same hours and employment terms as before. Some lenders take a stricter approach, while others offer more flexibility and assess your borrowing potential based on your full pre-maternity income. And so, again, finding a lender which understands your situation and is willing to work with your circumstances is vital.
How to get a mortgage on maternity leave
Applying for a mortgage while on maternity leave follows much the same process as a standard application, with the added requirement of providing extra documentation to demonstrate your financial situation, that is:
Proof that your income will return to its full level once you’re back at work
Key details about your maternity leave, such as its start and end dates
Payslips showing both your full pre-maternity wage and your current maternity pay (if applicable)
Evidence of savings and any additional income sources
How a broker can help you get a mortgage on maternity leave
Getting a mortgage while you’re on maternity leave admittedly comes with some unique challenges, but an expert mortgage broker will streamline the process by helping you:
Get a letter of reference from your employer. This letter confirms your intention to return to work, your expected return date, and any changes to your salary or terms of employment
Gather all required evidence, such as payslips (pre-maternity and maternity pay), proof of savings, and details about your future income. Having these documents organised significantly strengthens your application
Find lenders who are more understanding of maternity leave applications, owing to their extensive knowledge of the market. This saves you time, reduces stress, and helps you secure a better deal
It’s worth remembering that approaching unsuitable lenders leads to offers based on reduced income or outright rejections, and multiple failed applications will also harm your credit score. This makes professional guidance from a broker invaluable.
At The Mortgage Genie, we specialise in helping individuals on maternity leave, paternity leave, and those expecting a child to navigate these challenges. With years of experience, we’ll help you secure the best possible mortgage deal for your circumstances. If you’re interested, then be sure to contact us today at 01915809890.
The above blog has information contained within which was correct at the time of publication but is subject to change.
FAQs
Does being pregnant make it harder to get a mortgage?
Being pregnant won’t stop you from getting a mortgage, but it will influence the lender’s decision due to how they’ll consider any anticipated changes to your income and expenses. Namely, your application might be assessed using your maternity pay rather than your usual salary.
Can you get a mortgage while on maternity leave and self-employed?
Yes, you can get a mortgage if you’re both on maternity leave and self-employed. The main factor is how your absence affects your business income, i.e., if your business relies heavily on your personal involvement, lenders will see this as a risk. Yet, if your business can continue to generate income during your leave then you’ll be in a good position.
What size mortgage deposit will I need if I’m on maternity leave?
You’ll need a mortgage deposit of at least 10% of the property’s value if you’re on maternity leave. That said, putting down a larger deposit will help you secure a more competitive interest rate if your current income is based on maternity pay.
This information is a guide only and should not be relied on as a recommendation or advice that any particular mortgage is suitable for you. All mortgages are subject to the applicant(s) meeting the eligibility criteria of the specific lender. You should make an appointment to receive mortgage advice which will based on your needs and circumstances.