Balancing work life and family life can be difficult after the arrival of a new baby, and the last thing you want to worry about are your finances. But, life is unexpected, and if your family is ready to move while you’re on maternity leave, getting approved for a home loan is possible.
We’ll be honest with you. Your home loan application will be a little different, and some lenders will decline your application straight away. But, with help from us, you can secure a home loan on maternity leave.
Why Many Lenders Decline Maternity Leave Home Loan Applications
From the lender’s point of view, approving a maternity leave home loan application is a big risk. What if you don’t return to your job? Or have another baby? How will you pay back your loan then?
Not all banks and lenders have such strict lending policies, but most require you to meet certain requirements and include specific documents.
Almost all lenders will require you to produce evidence of your income, employment, and the terms of your maternity leave. Your application may require:
- Payslips from the 3 months before beginning maternity leave.
- A letter from your employer outlining the conditions of your maternity leave, including your scheduled return date, and whether your leave is paid or unpaid.
Factors that Lenders will take into Consideration
As well as the required documents, lenders will take into account the following factors:
The Duration of your Maternity Leave
Most lenders will not approve your home loan application while you’re on maternity leave for over 12 months. Leave lasting 6 months or 18 weeks is more favourable.
Your Financial Situation
While lenders consider the duration of your maternity leave, the also consider other means with which you can cover your home loan repayments, including:
- Equity in your home
- Government benefits
Whether your Maternity Leave is Paid or Unpaid
If your maternity leave is paid, you will have a greater chance of securing a home loan. The issue here is that paid maternity leave is often half you’re your usual salary. Lenders will judge your application based on your maternity leave salary, not your normal salary.
If your maternity leave is unpaid, your application is less likely to be approved. Most lenders will view your loan application as if you’re unemployed, regardless of whether you have a date to return to work.
Applying for a home loan while on maternity leave can be difficult, but with over 26 years’ experience in the industry, we have in-depth knowledge of the maternity policies of most of the lenders, and so we can help you submit a well-structured application to the right lender. Give us a call on 02 9068 6644 or send us an email.