Babies take up a lot of room, so it’s no surprise that many families find they need to make more space when there’s a new arrival. Whether you decide you need to move, or you want to make some improvements to your current home, you’ll probably need a new mortgage.
However, being on maternity (or parental) leave may affect your application, as your mortgage is directly linked to how much you earn. Lenders will want to understand your new financial position. For example, you may be going onto reduced income, and you’ll potentially also have new childcare costs that they’ll need to take into consideration.
It’s not to say that you can’t get a new mortgage while you’re on maternity leave – it is absolutely possible – and at MAPIO we can help!
So, what are lenders looking for?
Firstly, lenders will ask you about anything that may affect your future finances. Naturally, having a baby is one of those things. The question isn’t intended to catch you out – lenders want to be sure you can afford the debt you’re taking on, together with any new additional costs. Ultimately, this is a good thing for both the lender and you. Worrying about your financial situation is the last thing you need when you’re looking after a new baby.
Lenders will want to know about your income while you’re on maternity leave and many want to know about your pre-maternity leave income too. You should be ready to provide payslips showing both, so it’s worth saving or printing off recent ones before you go on leave. On your payslip, maternity pay may show up as ‘SMP,’ which stands for Statutory Maternity Pay, if that’s what you’re getting.
However, more importantly they’ll also want to know what your future income will be. If your income is going to be reduced because you’re going part-time, lenders will use this figure in their affordability assessments.
Lenders will also want to take future childcare costs into consideration when they’re working out how much you can afford to pay each month. If it’s your first child, you may need to research childcare costs in your area to provide a reasonably accurate estimate.
If your new mortgage is going to kick in before you go back to work, your lender may also want to see evidence that you can afford the monthly payments while you’re on leave. You may need to prove that you have enough savings in place to help cover the mortgage during this time.
MAPIO can help
Every lender treats mortgage approval and maternity leave slightly differently, which is why it can be helpful to talk to a broker who has experience working with an extensive range of lenders. Get in touch with us today and one of our experts will help guide you through the process.
T: 01904 235000
See what the parents of York say in the review on the website HERE
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
MAPIO Financial Limited is an appointed representative of PRIMIS Mortgage Network. PRIMIS Mortgage Network is a trading style of Personal Touch Financial Services Ltd which is authorised and regulated by the Financial Conduct Authority.
MAPIO Financial usually charges a fee for mortgage advice, the amount we charge is dependent on the amount of research and administration required and will be discussed and agreed with you at the earliest opportunity.