Today, we are speaking to our expert mortgage advisor from Bishops Stortford, Lorraine Collie, from Zing Mortgages. Lorraine discusses everything you need to know about maternity leave mortgages.
Finances during maternity leave and mortgages
Whilst having a baby is an amazing experience- it can also be quite scary for working mums! You may be wondering, how will our finances be affected? What will they look like? Will you be able to manage money-wise?
There are lots of different ways you can try and save money whilst you are on less income.
Thinking of applying for a mortgage?
Since your income will most likely be reduced whilst on maternity leave- especially if you are only receiving SMP (Statutory maternity pay)- you may be worried about passing a mortgage lender’s affordability checks.
The good news is that mortgage lenders will most likely accept your return-to-work salary as your income- which means that you should pass the affordability checks regardless of you no longer receiving your usual full-time wage.
Are you thinking about reduced hours after maternity leave?
Of course, it may mean that you’ll face difficulties paying your mortgage if you are going to be on a reduced income for a long period of time which is why it is important to think ahead and take into account childcare costs when you go back to work.
We understand how difficult managing your finances on maternity leave can be- especially if you are committing to additional big financial outgoings, such as a mortgage.
Our Expert Lorraine Collie answers commonly asked questions on Maternity Leave Mortgages
Today we are joined by our trusted expert Lorraine Collie- from Zing Mortgages in Bishops Stortford- Lorraine answers everything you need to know about managing your mortgage on maternity leave.
What would I do if maternity leave and one full time wage leaves us struggling to pay the mortgage?
You need to contact your lender immediately, in any situation where you are struggling to pay your mortgage you should contact them directly and ask for help. What arrangement they come to will be down to your lender and your specific circumstances, we’ve seen from the pandemic that they can help in times of need.
What are the different options when it comes to mortgage breaks and holidays?
This will depend on your lender and your individual needs. I have seen them in the past offer payment holidays or switch you to an interest-only payment reducing your payments dramatically. This is assessed on an individual basis and would have to be discussed with your lender.
Can I apply for a mortgage on Maternity leave?
Yes, the lenders won’t discriminate because you are on maternity leave. Each lender has their own criteria surrounding this, more commonly they will ask for a return to work letter from your employer confirming your return date and terms you will returning on i.e same as before or part time. If you are at the beginning of your maternity leave and only receiving Statutory maternity pay they may want to see savings to cover your income whilst off to ensure the mortgage payments would be covered.
Does maternity leave affect future mortgages?
No, unless you return on a lower wage then it shouldn’t effect any future borrowing. If you do change your job/hours then you would be reassessed based on your new earnings for future purchases or further advances.
Can I re-mortgage whilst on maternity leave?
Yes, they won’t discriminate against you being on maternity provided you intend to return to work on the same terms.
Top tips for getting a mortgage during maternity leave?
You would be asked to show your last payslip prior to maternity, a return to work letter stating dates and terms of return and if you are on Statutory maternity pay you may be asked to show savings to cover the shortfall in earnings.
Is there a limit to how much I can borrow for a mortgage on maternity leave?
The affordability limits will vary lender to lender, you can work with your salary provided you are returning to work.
Will maternity leave impact joint mortgages?
Not unless your circumstances are to change and you are looking to renew or purchase further.
How do things work for me on maternity leave as a self employed mum-to-be?
Self-employed income works differently, currently they will assess your latest 2 years earnings and ask to see 3 months business bank statements to show the income is sustainable going forward, as this will be lower then they will request to see savings to cover the earnings whilst you are off.
Could I still apply for Buy to Let mortgages?
If you are purchasing your first Buy to Let property then your income is assessed as if you were purchasing the property for yourself as they want to ensure any rental voids are affordable. If you are purchasing further buy to lets to add to your property portfolio then this will be assessed on rental income.
Get Mortgage Advice from a trusted Mortgage Lender
In all instances, it is advisable to contact an adviser to chat over your options. The lenders change criteria constantly so talking to an adviser like myself will give you a overall view of the current market rather than looking at an individual bank.
Mortgage Broker with FREE advice
My initial consultation is free of charge as I like to know I can help you before charging a fee. A quick chat over your options can give you that peace of mind going forward, whether that be now or in the future. Planning ahead is key when it comes to mortgages so please call and chat over your future plans.
You can contact our expert Lorraine Collie for mortgage advice, check out her listing with us here.
Lorraine is a protection and Mortgage advisor for Zing Mortgages. Zing Mortgages are an Independent Mortgage Adviser's offering a Premiere Mortgage Service with 'whole of market' representation with access to more than 12,500 mortgages from over 130 lenders. We offer honest, knowledgeable, unbiased mortgage and life protection advice from a dedicated, award winning team and pride ourselves in excellent customer service suited to your needs, whether that means in-person meetings or arranging your mortgage entirely by telephone.