There are a number of reasons why people decide to move house whilst expecting a child; some simply require a larger home for their expanding family, while others move to be closer to family members, or to be in a preferred school catchment area.
Applying for a mortgage can be a daunting prospect for applicants who are on (or about to go on) maternity, paternity, or adoption leave. This is because lenders have additional affordability checks to ensure borrowers can truly afford the repayment terms – both now and in the future.
Despite this, obtaining a mortgage is possible, it’s just a case of finding the right lender and proving you can afford the repayments.
Preparation is key
Your lender will ask certain questions to determine your affordability, including how long you intend to spend on leave and when you plan to return to work. They’re also likely to ask what the terms of your leave are: how much you are being paid and how long for. Additionally, the lender may wish to confirm your employment and terms of leave with your employer.
For a joint application, if either party is reducing the hours they work with an impact on their earnings, this revised income will be used for the affordability assessment.
If your earnings are reduced over your maternity leave, you may need to evidence other finances, such as accessible savings. It’s important to note that lenders are unlikely to accept savings that are tied up in property or in a notice savings account, as these cannot be accessed instantly.
When lenders are assessing future affordability, they must consider future impacts on the household's income and expenditure. Therefore, if you plan to return to work, the lender may ask about any anticipated changes to your working hours as well as additional costs, such as childcare costs, so it makes sense to plan ahead and be prepared to show this.
If you’re in receipt of certain regular payments, you may be able to use them towards your affordability. Maintenance payments from an ex-partner may be accepted if they are enforced by a Court Order or Child Maintenance Service and have a significant period left to run. You may also be able to use Child Benefit for younger children.
If you foster a child and receive foster payments, some lenders may accept these towards your affordability. This is likely to depend on whether your household has other income sources.
Finding the right lender
Working with a mortgage broker can help you find a mortgage that suits your circumstances. With maternity leave often having an impact on the household’s finances, and some parents choosing to stay home for extended periods of time, some lenders are more likely to accept your application than others. If you’re self-employed for example, the terms of your leave may be different to others and therefore your broker may recommend a specialist lender.
Most high street lenders generate a computer-based response when assessing affordability, meaning that for applicants with less common circumstances it can be harder to pass. Finding a lender that undertakes manual underwriting, evaluating applications on a case-by-case basis, can be helpful if your circumstances differ from the norm.
Bringing home a new baby is an exciting, but very busy time, even without the additional stress of trying to remortgage or purchase a new home. Preparation is key – alleviate some of the strain by being properly prepared.
—------------------------------------------------------------------------------------------------------------------------ Charlotte Grimshaw is Head of Mortgages at Suffolk Building Society.
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