Can You Get a Mortgage on Maternity Leave?

According to the Office for National Statistics, there are approximately 700,000 births per year in the UK and around 13% of women are pregnant at any given time, which means there are a significant number of women who may be wondering if they can get a mortgage while on maternity leave.

The good news, is there are plenty of options. In this insight, we will cover off what you need to know about getting a mortgage on maternity leave.

Key Takeaways

• Most lenders will still continue to lend to you on your full salary if you can evidence your planned return to work.
• You can evidence your return to work plans through an employer's letter.
• If you are due on maternity leave, you should inform your mortgage adviser. This will prevent any delays down the line if income evidence is needed again.
• If your lender does withdraw your mortgage offer, it is likely that your mortgage adviser will be able to find another lender who can help.

Can you get a Mortgage on Maternity leave?

Yes, you can get a mortgage whilst on maternity leave. However, it can be trickier. Lenders will need to decide whether to consider your maternity pay or your full pay when deciding how to assess your Mortgage affordability. 
 
You shouldn't let it put you off though, by speaking to a Mortgage adviser you will still be able to obtain an agreement in principle and know exactly where you stand with what is affordable. 

A Mortgage adviser with a panel of lenders will be able to assess different lenders and their policies to find the best mortgage for your circumstances.

Most lenders will continue to assess your application using your full time salary but they may require supporting evidence for the application. Such as, confirmation of your return to work date and the terms you will return on.

How Much Money Does Statutory Maternity Leave Pay?

In the UK, statutory maternity is paid up to 39 weeks and is just 90% of your average earnings for the first 6 weeks, followed by a maximum of £156.66 for the next 33 weeks. The average weekly salary is £640. That is quite a drop and lenders clearly need to be responsible when approving Mortgages during maternity leave, but equally, find a balance so that you aren't penalised for wanting to start a family.

How is my current Mortgage impacted by being on maternity leave?

If you are in the middle of a Mortgage term and you go on maternity leave, expect no changes to your mortgage. So long as you are financially comfortable with your repayments, you can continue as you are. You do not need to notify your Mortgage provider that your income has been reduced. 

What do I do if I can't afford my Mortgage on maternity leave?

It is expected that when you are on maternity leave, your income will fall. Depending on your circumstances you may be able to get through without needing to make changes to your Mortgage. However, not everyone can and you would not be alone. Lenders aren't as scary as you may think. The best thing to do would be to make contact with your lender and explain your circumstances. Lenders deal with financial difficulties on a day-to-day basis. There will be a range of options to consider that will support you during this time of reduced income. It could be that you are able to consider a temporary interest-only Mortgage, take a repayment holiday or increase your Mortgage term.

The options that are available to you may vary depending on the timing of your Mortgage product. For example, if you are in a fixed-rate period, you will have fewer options than someone on a standard variable rate. However, there will still be options for you. 

What happens to my Mortgage application if I go on Maternity leave?

If you are due to go on maternity leave at the same time as trying to move, unless you already have your Mortgage offer or completion date, you will need to speak to your lender. 

If your income is reduced it may impact the amount you are eligible to borrow. It depends on who your lender is and their policy. Some lenders will only consider your maternity pay, others may accept your full pay so long as you are able to confirm a return date and sufficient evidence from your employer that you return on the same terms.

As lenders have different policies, it is a good idea to speak to a mortgage adviser with a panel of lenders. It could be the case that your current lender may not support your application, but that doesn't mean there won't be a lender who would. Your best chance is to be able to find the mortgage provider with a policy that suits your circumstances best.

Will being on Maternity leave impact the deposit I need for a Mortgage?

Being on maternity leave will not require you to put forward a higher percentage of deposit. Although, you may decide if you are unable to borrow as much that you make up the difference by raising a larger deposit amount, assuming you are able to.

As lenders will likely consider lending you less it would be a good idea to shop around before deciding on using a larger deposit if that isn't your ideal scenario. A different lender may be able to lend more to you.

Will being on maternity leave always impact a mortgage application?

No, not all mortgage applications are impacted by going on maternity leave. For example, it might be that you are buying as a couple and the joint mortgage application is supported by the income of your partner. Another example is that the income could still stack up using your maternity pay income.

These outcomes may require a change of evidence, however, you would be able to proceed with buying your home as planned.

Can I Remortgage whilst on maternity leave?

You are able to Remortgage whilst on maternity leave. However, you may need to be able to support the mortgage on your lower income. It might be a better idea to consider a product transfer instead of a Remortgage. A product transfer does not normally require further income evidence so you will be able to re-fix your mortgage to take advantage of a new interest rate quickly.

What happens to my Mortgage application if I am self-employed and go on maternity leave?

You should declare that you are on or planning a maternity leave to your Mortgage provider. It's better to be honest about this and make changes needed to help your mortgage application proceed, rather than end up being burnt later on down the line when you are ready to complete. 

Your mortgage lender will need to review your application and may involve the underwriters to agree a decision on whether the business can continue to operate to the same level without your presence.

As you are self-employed, it does make it more difficult to evidence your maternity income as the income you normally provide to support your application is on an annual basis. It will not be easy to determine what your income would be if you were not working at 100% capacity for months.

Supporting evidence whilst on mat leave

In order to increase your chances of having a Mortgage approved whilst on maternity leave you should obtain evidence of the following:

• Your full time salary. This can be SA302's for self-employed or Payslips for the employed.
• Confirmation that you will return to work after your maternity leave finishes
• The date that you intend to return to work
• Confirmation that you will be returning to work on the same terms
• If your terms are changing, confirmation to confirm your new working hours/salary etc. For example, if you drop to part-time.

If you are unable to prove this, it may be your Mortgage application can only be considered on your maternity pay income or without your income included.

Do I need to tell my mortgage lender about maternity leave?

There is no reason to tell your mortgage lender about your maternity leave unless you are struggling with financial difficulties. However, if you do, you will not be penalised. If anything your lender may offer you flexibility in the form of underpayments or a repayment holiday. 

How to afford mortgage on maternity leave?

If possible, save money in advance to cover your mortgage payments during your leave. The more you can save before your baby arrives, the less financial stress you'll face during this period. Temporarily reduce discretionary spending on non-essential items to free up money for mortgage payments. Focus on essentials like groceries, utilities, and baby-related expenses. 

What should you do if you are applying for a Mortgage and going on maternity leave?

The best way to approach applying for a mortgage whilst going on maternity leave is proactively. Your lender will likely not find out your circumstances have changed.

If you are required to re-evidence your income, you might lose your home if your mortgage application is deemed no longer affordable. Especially if you are due to complete. Even if you can still proceed, withholding your changed circumstances may add delays to completion.

Despite this, as mentioned, most lenders will still consider your full income so long as you can evidence your return to work date. If your lender is not one of these, by being proactive, you have given yourself enough time to find a mortgage adviser who can find an appropriate lender who will consider lending to you.