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Getting a Mortgage on Maternity Leave

No impact on credit score

Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: June 30, 2021

Maternity leave for some parents-to-be is a time of financial uncertainty but, despite what you might have heard to the contrary, it’s possible to get a mortgage while you’re on it. Although some mortgage providers are cautious of customers who are off work on maternity, with the right advice, you shouldn’t have to put your homeownership plans on hold.

In this guide, we’ll explain the full implications of maternity leave on mortgages and mortgage applications, outline the lending criteria for new parents and tell you where to turn for the right advice.

Plus, in our FAQ section, we field the questions we hear most often from mortgage applicants who are on maternity leave or due to go off on it.

Can you get a mortgage on maternity leave?

Yes, with some mortgage lenders this is absolutely possible, but approaching the right one is key. There are mortgage providers who 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 the needs of customers on maternity leave, won’t 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 getting mortgages for borrowers who are currently on maternity leave or those who are due to go on it.

Does maternity leave affect a mortgage application?

Maternity leave affects mortgage applications because most lenders will assume the applicants’ income will decrease when they go on leave from work. So, if you apply for a mortgage and your normal salary is say, £30,000 a year, when you’re on maternity leave it is likely to drop down considerably – if not for a short time, then for the whole time that you’re away from work. Some lenders won’t base your affordability on the full £30,000 and may offer you a mortgage based on a varying percentage of this, while others won’t lend at all.

There are, however, lenders out there who are more than happy to consider your full salary, even if you’re on maternity leave at the time of the mortgage application.

How to get a mortgage on maternity leave

To get a mortgage from one of these flexible lenders, you will likely need a letter or reference from your employer confirming that…

  • That you’ll definitely be going back to work
  • The projected date you’ll be going back

Your lender is also likely to ask for evidence of the terms you’ll be returning to work on. For example, if your hours and salary are going to be the same. If not, then what will your income be? Lenders will likely only offer you a multiple of the salary you can prove you’ll be on when you’re back at work. If you can evidence full-time hours and an unchanged rate of pay, there’s no reason why you can’t borrow based on your normal salary.

You should also consider speaking to a mortgage broker who specialises in customers on maternity leave before you apply, as they will be able to introduce you to a lender who understands your needs and circumstances, and is best positioned to offer a good deal.

What if I’m going back part time?

Then most lenders will only be able to offer you a mortgage based on a multiple of the part-time salary you can evidence. 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 guide to getting a mortgage on part-time income.

What’s the most you can borrow on maternity leave?

When you’re on 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 ones who will lend based on the 100% of your normal salary.

This is why finding the right lender is so important if you’re applying while on maternity leave. Ideally, you’ll want to use a lender who allows you to declare the maximum amount of income without any caveats attached. And you’ll want to find that lender first time, since too many applications in a short period of 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.

Joint mortgages when one applicant is on maternity leave

If you’re making a joint mortgage application and one of the applicants is on maternity leave, some lenders will look at both of your earnings and lend between four and five times 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’ll be able to borrow between £160,000 and £200,000 depending on circumstances.

How much deposit do you need?

The amount of deposit you’ll need to get a mortgage when pregnant or on maternity leave really 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 Help to Buy.

Typically, the larger the deposit, the higher the chance of getting a mortgage based on maternity leave income at the best rate possible. You’d have a much stronger case for borrowing at 50% loan to value (LTV) than if you were borrowing at 95% LTV, for instance.

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 on by lending to you. If, for example, you have bad credit, you might be asked to put down a larger deposit.

You can read more about deposit requirements in our complete guide to mortgage deposits.

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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 who’s willing to be flexible and let you borrow based on your full-time wage without any caveats attached.

Most of these lenders will want to see evidence that you’re returning to work on full-time hours and unchanged employment terms, and some will be stricter about this than others.

The thing to remember is 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 first time.

Which mortgage lenders will accept my full salary?

The majority of UK mortgage lenders will at least consider a mortgage application based on your full salary while you’re on maternity leave. There are only a few who won’t and they include Vida Home Loans, Hodge and Marsden Building Society.

But bear in mind that some of the lenders who will consider 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, but only your maternity leave income can be used for the affordability assessment
  • Teachers Building Society decide whether to offer mortgages to maternity leave applicants based on their full-time salary on a case-by-case basis
  • Natwest will let you use your full-time salary for affordability purposes but will ask you to confirm that you’re planning to return to work full-time and reserve the right to request additional information if they feel that’s necessary
  • Post Office will ask you to confirm whether you’re planning to return to work full-time and only let you declare your reduced income if you’re going back 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 Want 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 is merely a few of the caveats that some mortgage lenders apply to maternity leave applicants. All of this should be taken into account when searching for the right lender for you, and this is why speaking to a mortgage broker is recommended.

A broker who specialises in maternity leave applicants will know exactly which lenders will be happy to offer mortgages based on full-time salary with minimal caveats. What’s more, they have deep working relationships with these mortgage providers and can negotiate the most favourable deal on your behalf.

Speak to an expert about maternity leave and mortgages

If you’re on maternity leave, or due to go on maternity leave, and want to apply for a mortgage, finding the right lender is critical. 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 first time is to apply through the right broker, and this is where we come in. We offer a free broker-matching service that will take your needs and circumstances into account 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 0808 189 2301 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.

FAQs

Should you tell the lender if you’re on maternity leave?

Yes. If you’re on maternity leave, you will need to tell the mortgage lender before they finalise your application and declare all of the specifics around your employment situation. If you’re already on maternity, there’s a good chance this will come to light during the lender’s checks, anyway. For instance, you will be expected to provide recent payslips to prove your earnings, and evidence of your maternity leave is likely to crop up on them.

Moreover, during the application process, the lender will also ask you about any material changes to your circumstances that could impact your ability to repay the mortgage. Maternity leave and a lower income definitely qualify, and it’s in your best interest to be completely honest and transparent when answering these questions.

Should you tell the mortgage lender if you’re pregnant?

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 in time 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 will be able to 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 their policy, and this is just one reason why using the right mortgage broker is vital.

What’s the difference between maternity leave and paternity leave?

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, when applying for a mortgage on maternity or paternity leave – the same rules apply.

Can self-employed people get a mortgage on maternity 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 what your future income will be.

If you declare that you are pregnant, or your partner is pregnant and therefore going to be on maternity/paternity leave, this is quite clearly going to 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 level of day-to-day involvement in the business. If the business will not function without you being there, then the impact on your income is going to 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 a view that your income will not be affected by your self-employed maternity leave, but you will need to satisfy any further questions the underwriter has in regards to that.

What if I’ve got bad credit?

If you’re going on maternity leave and you’ve bad credit, you may find getting a mortgage much more difficult. Unfortunately, lenders that accept your full pre-maternity income will typically be the type of lender that won’t offer bad credit mortgages.

There are many lenders that 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 ago your bankruptcy was.

However, those types of lender are not likely to accept your full income when on maternity leave and to be approved it will really be on a case-by-case basis. Under niche circumstances like this, it’s important 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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About the author

Pete, 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 found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with 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 OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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