Is it possible to get a mortgage while on maternity leave?
Yes. It is possible to get a mortgage while on maternity leave, however it can be a little difficult compared to arranging a normal mortgage. Most lenders will consider the fact that your income during the year when you take a maternity leave will reduce significantly and therefore your affordability, i.e. the maximum loan amount that you can get, will be reduced. For example, if your normal annual salary is £50k but during the year when you take maternity leave this reduces to £30k, most lenders will assess your affordability based on £30k being your income.
However, there are various other lenders who would consider the full £50k as your income provided that you are able to furnish the following details from your employer to the lender:
- Confirmation regarding your return after maternity leave
- Date of you will return to work
- Confirmation that your salary will remain at least at the level prior to maternity leave
Should I tell the lender if I am on maternity leave?
Yes. Whenever you apply for a mortgage, the mortgage application asks you to disclose any material change to your financial circumstances which may have an impact on your ability to repay the mortgage. Not doing so can be considered as a non-disclosure or mortgage fraud. Therefore it is important that you disclose that you are on maternity leave. If this is against the policy of the lender then they may reject your application. However there are always many other lenders who will happily accept your application.
What is the difference between maternity leave and paternity leave?
There are no significant differences between maternity and paternity leave as far as your mortgage application is concerned. Both types of leaves should be honestly disclosed in full in order to prevent any issues in the future. Most lenders will operate the same policy for both maternity as well as paternity leave.
Should I tell the mortgage lender if I’m pregnant?
Yes. It is always advisable to disclose information about your pregnancy to your lender as you will shortly have one more dependent and your income may be reduced during maternity leave. This is a material change in your financial situation and your ability to repay the mortgage. Failing to disclose information can lead to further issues related to non-disclosure and fraud.
What is the most I can borrow on maternity leave?
The maximum loan amount in the case of arranging a mortgage during maternity leave will vary greatly from lender to lender. While some lenders may only consider 50% of your income to calculate your affordability, there are others who will consider 100% of your income. What needs to be done is to determine which lenders will consider 100% of your income and offer the highest multiple of your income when determining your maximum loan amount. There will be various lenders who will offer a maximum loan amount of up to 3-4 times of your income while other lenders may offer up to 5 times your income.
Is it possible to get mortgage if I am self-employed and on maternity leave?
Yes. It is possible to get a mortgage if you are self-employed and on maternity leave. However, this will depend upon the impact that your leave will have on the business. If your presence is essential for business income, it may be difficult to get a mortgage. However, if you have other employees who can handle the business while you are on maternity leave and the business income will at least remain stable, then many lenders will gladly accept your application.
Is it possible to get a mortgage with bad credit while on maternity leave?
Yes. It is possible to get such a mortgage, however, your chances of obtaining a mortgage will also depend upon factors such as the recentness and severity of the credit issues. If you have had recent credit issues of a severe nature such as bankruptcy, mortgage arrears, repossessions, etc. then it may be difficult for you to obtain a mortgage. However, there are various specialist lenders who can accept your application even with such severe issues. A few of these lenders also offer mortgages with the LTV as high as 85%. Many of these lenders work only through a mortgage broker as it helps them to save a lot of time appraising improperly completed applications and applications which are most likely to be rejected. Therefore, it is advisable that you approach a responsible and experienced broker such as The Mortgage Hut in order to ensure that you get the best deal possible for your application.
To learn more about us and how we can help you achieve your mortgage goals, just get in touch with us at The Mortgage Hut.