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Maternity leave is an exciting time for any new mum. But it also comes with a few worries. What kind of parent will you be? How will you cope with the lack of sleep? How will it affect your finances? Can you still get a mortgage?
Being on maternity leave means you will likely be on a lower wage for a while. This can make things a little stressful, especially if you want to apply for a mortgage.
A lower wage could make it more difficult to get a mortgage offer. But it is possible. You need to supply plenty of evidence that your income will increase again when you return to work. You will also need to prove when that will be.
Be as upfront and honest as possible with potential lenders about your situation. This will make it easier for them to offer you an accurate deal. Knowing when you will go back to work means lenders can factor in your change in salary to the deal they offer you.
Maternity leave can affect the chances of lenders offering you a mortgage, as it usually means you have a lower income for a while.
If your normal salary is £30,000 a year but you will go on maternity leave, your earnings for that year may fall. Some lenders will not consider your full £30,000 wage if you are on or about to start maternity leave.
Instead, they will look at your maternity wage. This may mean they offer you a mortgage based on a varying percentage of this, while others will not lend to you at all.
Being on a lower income can make mortgage approvals harder. Mortgage lenders need to know you earn enough to cover your loan. This is why the lower maternity pay can cause problems.
When you apply for a mortgage, you need to provide evidence of your finances. This is the same when you apply for a mortgage on maternity leave. The only difference is that you may have to present more proof.
You might find a bigger deposit makes getting a mortgage while on maternity leave easier. This is because it means you need to borrow less. Your repayments will be smaller and interest rates may be lower.
Buying with someone else can also make getting a mortgage easier. Putting two wages towards a mortgage can reassure lenders that you can meet all repayments.
Remember, every lender is different. What works for one may not work with another. Speak to your lender to find out what information they need from you.
To help meet your mortgage repayments during maternity leave, here are some top budgeting tips.
The content on this page is for reference and does not constitute financial advice. For impartial financial advice, we recommend government bodies like MoneyHelper.