In this article, we explain what affects your maternity mortgage application and how to increase your borrowing power while on maternity leave. To jump to specific sections of this article use the following links:
- Do I have to tell the mortgage lender I am pregnant?
- Does pregnancy affect a mortgage application?
- Does maternity leave affect your mortgage application?
- Does adoption leave affect a mortgage application?
- Does paternity leave affect a mortgage application?
- Can you get a mortgage if you're self-employed on maternity leave?
- Can you remortgage while on maternity leave?
- How to improve your borrowing power on maternity leave
- How to apply for a mortgage while on maternity leave
- How to find the best mortgage deal on maternity leave
- What to do if you are struggling to pay your mortgage while on maternity leave
Do you have to declare pregnancy on a mortgage application?
Yes, you will usually be required to disclose all material facts that you know of which could affect your income and pregnancy is normally considered one of these factors. If you choose not to tell your mortgage lender that you are pregnant, you may fall foul of mortgage fraud.
Does pregnancy affect a mortgage application?
Pregnancy affects your mortgage application in much the same way that being on maternity leave does because your lender will be keen to assess how your financial circumstances will change. If you have a financial plan, you should share this with your mortgage lender to demonstrate how your income will change and how you will afford your mortgage payments.
If your return to work will involve paying for childcare then it is worth doing some research on the costs involved and including these within your plans. If you are early in your pregnancy and have yet to make plans for maternity leave and what your life will look like, begin by completing a budget planner which will help you to get your finances in order.
Pregnancy can affect the amount that you are able to borrow applying for a mortgage but it is possible to increase your borrowing power. You should also speak to a mortgage expert* who can help you to find a lender and mortgage deal to suit your needs.
Does maternity leave affect your mortgage application?
No, being on maternity leave in itself won't affect the outcome of your mortgage application but lenders will look for evidence that you can afford your mortgage payments whilst you are on maternity leave and after you return to work. Importantly, not all lenders treat applicants on maternity leave in the same way so you should speak to a specialist mortgage broker* to get help sourcing the more favourable lenders.
If you are planning to return to work full-time to earn the same income that you did before your maternity leave, it is likely that your lender will allow you to borrow an amount similar to what you would have qualified for before maternity leave. But, returning to work on a part-time basis or in a different role with a reduced income could impact your borrowing power so your lender will want to know this. It will also benefit you to know that you can afford to keep up with your monthly mortgage payments based on your plans.
Depending on your return to work plans and the amount of maternity pay you will receive, some lenders won't consider you for a mortgage while others will consider lending to you based on a percentage of your full-time salary. It is even possible that the lender will take all of your pre-maternity wages into consideration but you have to supply plenty of evidence to support how you will pay your mortgage while on maternity leave and when you return to work. Take guidance from an independent mortgage specialist* to ensure that you choose the best mortgage lender for your circumstances.
Does adoption leave affect a mortgage application?
Welcoming a new addition to your family can involve a change to your financial circumstances whether you take adoption leave or not. Any impending change to your finances is relevant to a mortgage application so you should disclose any reduction in income or increase in outgoings as a result of adopting a child.
As with maternity leave, you should share the details of how you will budget for a reduction in your income during any time that you take away from work whether this is temporary or permanent.
Your lender will then be able to decide how much you can borrow based on your revised affordability. You should include information regarding statutory adoption pay and any additional support payments you can expect from your employer.
Does paternity leave affect a mortgage application?
Parental leave is less likely to affect your mortgage application because it is usually limited to 2 weeks and won't cause a significant shortfall in your income. You should receive statutory paternity pay and you may receive additional paternity pay if your employer allows for this in your employment contract. In real terms, you are more likely to take annual leave to facilitate your paternal duties due to the fact that you will be paid more this way.
However, you may have planned to take prolonged paternity leave and if you do this, you should share your plans with your mortgage lender. Similarly to maternity leave, you should compile a budget plan that highlights your income and outgoings, how these will change and how you will facilitate the shift in your earnings and any extra childcare costs.
Can you get a mortgage if you're self-employed on maternity leave?
If you are self-employed and pregnant, your mortgage application will usually require extra evidence to show how your income will change (if at all) and how you plan to keep up with your mortgage payments until you return to work. If your business is self-sufficient, there may be no change to the revenue it generates for you when you step out to take maternity leave.
However, most self-employed business people will either see a reduction in the business revenues or additional costs associated with replacing their function within the business. Building your budget based on savings, maternity allowance and any continuing income you may receive from your business will help you get the best mortgage application outcome.
To maximise the chances of getting the mortgage you need, you should also read our article, "Mortgages for self-employed: 3 things you need to know". Being self-employed can make it tricky to qualify for a mortgage and with the added complexity of maternity leave, you will benefit from the guidance of a mortgage expert* who will know which lenders to approach.
Can you remortgage while on maternity leave?
Yes, remortgaging while you are on maternity leave is very much the same process as it is at any other time. Depending on your mortgage lender's process, you may be required to provide evidence of earnings but maternity is unlikely to affect your remortgage adversely. If your income has or will reduce significantly then it may be worthwhile discussing this with your mortgage broker to ensure that you do not fall behind with your new mortgage payments.
You will find useful guidance in our article, "How to remortgage and get the best rate".
How to improve your borrowing power on maternity leave
Affordability is the key to increasing your chances of getting a mortgage but factors that reduce the risk for your mortgage lender will also help. Here are some extra ways to secure a mortgage on maternity leave:
1 - Lower your LTV
A larger deposit that lowers the loan-to-value (LTV) ratio reduces the risk for your lender so it is more likely to lend to you. Notably, you are unlikely to get a mortgage while on maternity leave if your LTV is more than 90%.
2 - Buy with a second applicant
Buying with another person can improve your borrowing ability especially if the second income can support the mortgage payments. Joint mortgages lower the risk that you'll become unable to afford your mortgage.
3 - Use savings
If you plan to use savings to supplement your income, evidence to support this can help to boost your borrowing power.
4 - Budget efficiently
A budget that details how your income and expenditure will change as a result of maternity leave can be very powerful in presenting a case for your affordability. Lenders want to see that you have a plan that is realistic so don't forget to include things like childcare costs - a budget planner can be a great tool.
How to apply for a mortgage while on maternity leave
You should approach your mortgage application in the usual way but be prepared to provide extra information about your maternity and future income. Many lenders will ask you to provide additional evidence so that they can assess you fairly for the mortgage you want.
Remember, your lender has a responsibility to ensure that you are not overcommitted financially and this benefits both you and the lender by reducing the likelihood of you struggling to repay your mortgage in the future.
If you haven't already done so, prepare a budget based on how your income and outgoings will change during and after maternity leave. Once you have done this, you should share evidence to support your maternity budget with your mortgage lender.
Maternity information to support your mortgage application
Below we list examples of evidence that you can provide to support your mortgage application when on maternity leave:
- Evidence of earnings before maternity leave
- Evidence of earnings during maternity leave
- Employer evidence to confirm the date for your return to work
- Employer evidence to confirm your return to work income
- When your maternity leave will begin
- Evidence to support any other income sources
- Evidence of savings that you plan to use (if any)
- Future childcare costs (if any)
How to find the best mortgage deal on maternity leave
Arranging a mortgage is mainly about proving that you can afford to repay the cost of your mortgage and that you have a good track record of paying your bills on time.
Mortgage advisers are experts in applying for mortgages successfully due to their specialist knowledge of what you need to disclose and which lenders consider applicants on maternity leave.
To find the best mortgage deal, you can start by comparing rates using our mortgage rate comparison tool which will give you the best current mortgage rates based on your mortgage loan value and deposit amount. Follow this up by sourcing a mortgage adviser you can trust who will provide you with guidance and support to select the best mortgage lender and deal to apply to.
If you don't have a mortgage adviser, you can contact Habito* which is an online mortgage broker with access to over 90 lenders' deals. Or, you can find a mortgage adviser who is local to you and vetted by users in your area through the VouchedFor* service. They'll prevent you from wasting your time applying to lenders that don't have good outcomes for mortgage applicants on maternity leave and connect you with mortgage lenders who do.
What to do if you are struggling to pay your mortgage while on maternity leave
If you have made space in your maternity budget for your mortgage payments, you should have no problem keeping up with your monthly payments. However, things can change after a child arrives and if you find yourself struggling to pay your mortgage, there are things that you can do.
If you are pregnant or on maternity leave, you can qualify for a mortgage payment holiday that allows you to pause your mortgage payments. Lenders will usually allow mortgage holidays if you have overpaid ahead of time but there are times when personal circumstances will merit this arrangement even if you have not overpaid.
You should consider carefully that a mortgage payment holiday is likely to increase your mortgage costs when your mortgage holiday ends and it could also adversely affect your credit score. Speak to your lender to discuss your options - the sooner you do this, the more options you'll potentially have to resolve matters. Our articles, "How to save money on your mortgage" and "Where to get free debt advice" may be useful.
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