Getting a Mortgage on Maternity Leave
Find out how you can still successfully apply for a mortgage whilst on maternity leave
Firstly, are you currently on maternity leave?
Author: Pete Mugleston
CeMAP Mortgage Advisor, MD
We’ll explain how you can still apply for a mortgage on maternity leave, what steps you need to take and why seeking the help of a mortgage broker can boost your chances of success.
Can you get a mortgage on maternity leave?
Yes, with some mortgage lenders, this is possible, but approaching the right one is critical.
Some mortgage providers won’t lend to applicants on maternity leave at all, while others will want to see water-tight evidence that you’re returning to work on full salary.
You’ll need to find a mortgage lender who understands customers’ needs during maternity leave and will not penalise them with caveats or turn them away altogether.
The best way to find a lender like this is to apply through a broker who specialises in obtaining mortgages for borrowers currently on maternity leave or those who are due to go on it.
Will maternity leave affect your application?
Maternity leave affects mortgage applications because most lenders assume the applicants’ income will decrease when they go on leave from work.
If you apply for a mortgage and your normal salary is, for example, £30,000 a year when you’re on maternity leave, it is likely to drop considerably—if not for a short time, then for the whole time that you’re away from work.
Some lenders will not base your affordability on the full £30,000 and may offer you a mortgage based on a varying percentage of this, while others will not lend at all.
There are, however, mortgage lenders out there who are more than happy to consider your entire salary, even if you’re on maternity leave at the time of the mortgage application.
How to get a mortgage on maternity leave
Your first recommended step is to speak with a broker with experience arranging mortgages under these circumstances. If you enquire with us, our broker-matching service will match you with the right advisor.
Your mortgage broker will then be able to help with the following:
- Gaining a letter of reference from your employer. This letter will need to confirm your intention to return to work and the projected date you’ll be going back.
- Gathering all the required documentary evidence for your application. This should include paperwork confirming the remuneration terms you’ll be returning to work on, including whether there will be any changes to your annual salary, etc.
- Finding the right lenders who can help. Your mortgage broker will be able to quickly identify the lenders who will look more favourably on an application of this nature. This will save you time, stress and, potentially, some money.
What if you’re going back part-time?
Then, most lenders can only offer you a mortgage based on a multiple of the part-time salaries you can provide. You’d essentially be treated as being in part-time employment, which doesn’t necessarily mean you can’t get a mortgage.
You can read more about this in our article on getting a mortgage on part-time income.
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What’s the most you could borrow?
During maternity leave, the most you can borrow on a mortgage will differ from lender to lender.
Some will take 50% of the total income you can evidence, others won’t take any of it, and there are even some lenders who will lend based on 100% of your normal salary.
This is why finding the right lender is important if you’re applying on maternity leave.
Ideally, you’ll want to use a lender who allows you to declare the maximum income amount without any attached caveats. You’ll want to find that lender for the first time since too many applications in a short time can negatively impact your credit report.
Some lenders will allow you to borrow 4.5 times the amount of income you can evidence; others stretch to 5 times and a minority even higher, but other factors, such as having bad credit and the amount of deposit you’ve saved, can impact your borrowing potential.
You can see how this could work out for you by using our mortgage affordability calculator below:
Mortgage Affordability Calculator
Use this calculator to determine how much you could potentially borrow for a mortgage, based on the typical salary multiples used by most UK lenders.
Your Results:
You could borrow up to
Most lenders would consider letting you borrow
This is based on 4.5 times your household income, the standard calculation used by the majority of mortgage providers. To borrow more than this, you will need to use a mortgage broker to access specialist lenders.
Some lenders would consider letting you borrow
This is based on 5 times your household income, a salary multiple you might struggle to qualify for without the help of a broker. This income multiple is not widely available to customers who are applying directly with a lender.
A minority of lenders would consider letting you borrow
This is based on 6 times your household income, a salary multiple you will struggle to get without a broker. Six-times salary mortgages are usually only available under very specific circumstances.
Get Started with an expert broker to find out exactly how much you could borrow.
Get StartedJoint mortgages when one applicant is on maternity leave
Suppose you’re making a joint mortgage application, and one of the applicants is on maternity leave. In that case, some lenders will look at your earnings and lend between four and five times your combined income under the right circumstances and with appropriate evidence of income.
Example: If both named applicants earn £20,000 and one is on maternity leave, some lenders will consider your joint income to be £40,000, so as long as you can evidence that whoever is going to be off work – on maternity or paternity leave – will be going back on the same terms of employment. In this scenario, with a £40,000 joint income, you can borrow between £160,000 and £200,000, depending on circumstances.
How much deposit do you need?
The amount of deposit you’ll need depends on your overall situation.
But the minimum you’re likely to need is 10% of the property’s value, unless you’re applying through a scheme like First Homes.
Typically, the larger the deposit, the higher the chance of getting a mortgage based on maternity leave income at the best rate possible.
For instance, you’d have a much stronger case for borrowing at 50% loan-to-value (LTV) than if you were borrowing at 95% LTV.
The amount of deposit you’ll be asked for will also hinge on factors beyond your maternity. It all depends on how much risk the mortgage provider thinks they’re taking by lending to you.
If, for example, you have bad credit, you might be asked to put down a larger deposit.
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Remortgaging on maternity leave
Remortgaging on maternity leave works similarly to making a new mortgage application.
It’s a case of finding the right mortgage lender, one willing to be flexible and let you borrow based on your full-time wage without any attached caveats.
Most of these lenders will want evidence that you’re returning to work on full-time hours and unchanged employment terms; some will be stricter about this than others.
Remember that, with the right lender, you’re unlikely to have to wait until you return to work to remortgage based on your full-time salary.
The best way to find the right lender is to apply through a broker who specialises in customers on maternity leave.
They’ll know exactly which mortgage providers to approach for a remortgage under these circumstances, so you can rest assured that you’ll be paired with the ideal one the first time.
Which mortgage lenders will accept your full salary?
Most UK mortgage lenders will at least consider a mortgage application based on your full salary while you’re on maternity leave.
Only a few won’t, including Vida Home Loans, Hodge, and Marsden Building Society.
However, remember that some of the lenders considering this may have caveats.
For example…
- Earl Shilton Building Society will consider offering you a mortgage based on a multiple of your full-time income. Still, only your maternity leave income can be used for the affordability assessment.
- Teachers Building Society will decide on a case-by-case basis whether to offer mortgages to maternity leave applicants based on their full-time salary.
- Natwest will let you use your full-time salary for affordability purposes but will ask you to confirm that you plan to return to work full-time and reserve the right to request additional information if they feel that’s necessary.
- The Post Office will ask you to confirm whether you plan to return to work full-time and only let you declare your reduced income if you return part-time.
- Precise Mortgages will only consider your full-time salary when you’ve returned to work and will ask for a letter from your employer to verify your hours and pay
- Santander wants to know that your mortgage is affordable while you’re on maternity leave and will factor in anticipated childcare costs when assessing this.
The above are some caveats that some mortgage lenders apply to maternity leave applicants.
All of this should be taken into account when searching for the right lender, which is why it is recommended that you speak to a mortgage broker.
A broker specialising in maternity leave applicants will know which lenders will happily offer mortgages based on full-time salary with minimal caveats.
Moreover, they have a deep working relationship with these mortgage providers and can negotiate the most favourable deal on your behalf.
Speak to an expert about maternity leave and mortgages
Finding the right lender is critical if you’re on maternity leave or are due to go on maternity leave and want to apply for a mortgage.
Approaching the wrong one could mean being offered a mortgage based on a capped percentage of your full-time salary or being turned away altogether.
The last thing you want is to have to approach multiple lenders, as too many finance applications in a short space of time can damage your credit report.
The best way to find your ideal lender for the first time is to apply through the right mortgage broker, and this is where we come in.
We offer a broker-matching service that will consider your needs and circumstances and introduce you to the best advisor for the job. This will be a fully-vetted broker who helps people get a mortgage on maternity leave every day.
Call 0330 818 7026 or make an enquiry online, and we’ll introduce you to a broker for a free, no-obligation chat that won’t leave any marks on your credit report.
Get started with an expert on maternity leave mortgages
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FAQs
Yes. If you’re on maternity leave, you must tell the mortgage lender before they finalise your application and declare all of the specifics about your employment situation.
If you’re already on maternity, there’s a good chance this will come to light during the lender’s checks. For instance, you will be expected to provide recent payslips to prove your earnings, and evidence of your maternity leave will likely crop up on them.
Moreover, during the application process, the lender will ask you about any material changes to your circumstances that could impact your ability to repay the mortgage.
Maternity leave and a lower income qualify, and it’s in your best interest to be completely honest and transparent when answering these questions.
Yes. If you’re applying for a mortgage when pregnant, it’s best to let the lender know.
They won’t ask you if you’re pregnant directly, but, as above, you’ll be asked to name any material changes that could affect repaying the loan, and pregnancy is one of them.
Of course, as you’ve not yet started maternity leave, it’s technically a grey area as to whether expecting parents need to legally disclose not only the fact that they’ll be away from work but also that they’ll eventually have a new dependent, which can further impact affordability.
Because that dependent doesn’t yet exist, not every lender will have the same opinion on whether this needs declaring and even at which point you’re supposed to disclose it. Should this be at the point of conception? Week four? Week 12? Week 26? At birth?
The lender’s underwriters can advise more on this. When getting a mortgage while pregnant, it’s always important to be upfront and honest about everything to ensure you fit with the policy, and this is just one reason why using the right mortgage broker is vital.
In the eyes of mortgage lenders, it makes very little difference. Most lenders that accept people on maternity leave will use the same guidelines for paternity leave. In short, the same rules apply when applying for a mortgage on maternity or paternity leave.
Yes, but this can be less straightforward. If you’re looking for a self-employed mortgage and are going on maternity leave, the lender will want to know what impact this might have on your business.
For instance, most banks will lend based on the figures from your year-end accounts or your SA302s, which obviously won’t state your future income.
Suppose you declare that you are pregnant, or your partner is pregnant and, therefore, going to be on maternity/paternity leave. In that case, this will affect how much time you can spend on or at your business and, in turn, impact your future income.
The effect that may have on your application will depend on your day-to-day involvement in the business. If the business will not function without you, then the impact on your income will be significant.
But if you own a business and there are employees that will look after the business for you, then the impact on the business and therefore your income will be less significant.
In the latter instance, the lending underwriters may take the view that your income will not be affected by your self-employed maternity leave. Still, you will need to satisfy any further questions the underwriter has in regard to that.
If you’re going on maternity leave and you have bad credit, getting a mortgage may be much more difficult.
Unfortunately, lenders that accept your full pre-maternity income will typically not offer bad credit mortgages.
Many lenders accept adverse credit, depending on your deposit size and other factors. Some of them will accept cases as severe as bankruptcy and with as little deposit as 15%, depending on how long your bankruptcy was.
However, those types of lenders are not likely to accept your full income when you are on maternity leave, and approval will really be on a case-by-case basis.
Under niche circumstances like this, it’s essential to talk to a mortgage broker who knows the market before you apply, as this will give you the best chance of finding the right lender.
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Pete Mugleston
CeMAP Mortgage Advisor, MD
Pete, a CeMAP-qualified mortgage advisor and an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete successfully went the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained and his love of helping people reach their goals led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.
Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for Online Mortgage Advisor of course!
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