Getting a mortgage on maternity leave

Maternity leave is an exciting time for any new mum. But it also comes with a few worries. What kind of parents 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. 

How does being on maternity leave affect applying for a mortgage?

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.

There are ways to prove you can afford to repay a mortgage. You can provide evidence of:

  • Your partner's wage
  • When you will return to work
  • How much your income will be when you go back to work

While paternity leave can also come with a period of lower income, it is not typically as long as maternity leave. Because of this, mortgage lenders generally do not consider it. But it is still best to be upfront with your lender if you plan to take paternity leave.

How to apply for a mortgage while on maternity leave

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. 

Most lenders will ask for the following to show you can afford your mortgage:

  • Dates of when your maternity leave starts and ends
  • Payslips for your full wage and maternity wage (if it has started)
  • Evidence of any savings you have
  • Proof of any extra income sources

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. 

Repaying your mortgage while on maternity leave

To help meet your mortgage repayments during maternity leave, here are some top budgeting tips.

1. Take stock of your finances

It is never too early to work out your baby budget. Knowing exactly what’s coming in and going out each month is vital to keep up with all your payments. It also helps you work out if you can afford your mortgage.

2. Cut back on expenses

If your maternity wage will be less than what you are used to, it may be worth cutting back on some expenses.

Start by dividing your outgoings into essential and non-essential items. This gives you an idea of what you need to spend each month and what you have left over. You can cut back on non-essential items, making it easier to afford your food, bills and mortgage.

3. Reduce your debts

With fewer debts to pay, you could make it easier to meet your monthly mortgage payments.

Consider paying off some debts early if you can without facing an early repayment fee. You could also shop around for better deals on your credit cards to reduce credit card debt.

4. Start a savings account

Put a little money aside each month in the build-up to your maternity leave. This will help you cover any unexpected costs during your maternity leave.

You could also use a savings account to save a larger deposit. This should reduce how much you need to borrow for your mortgage.

5. Find ways to boost your income

If your maternity wage is very low, you might be able to get extra financial help. This may include child benefit or tax credits.

You could even look for ways to raise money by selling unwanted items. Check for old mobiles, laptops or clothing and see if you can sell them to raise some extra cash towards a larger deposit.

6. Keep track of important dates

You have many things to do and dates to remember when expecting a baby. Make a list of key payment dates to ensure you do not miss any.

Once you know what comes out of your account and when, you should find it easier to manage your funds.

The content on this page is for reference and does not constitute financial advice. For impartial financial advice, we recommend government bodies like MoneyHelper.

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