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Maternity Leave Mortgages

Lorraine Collie
/in /by Lorraine Collie

Disclosure: This article may contain affiliate links, this means at no cost to you, we may earn a small commission if you purchase a product through them.

Maternity Leave Mortgages

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.

Is there such a thing as a family mortgage?

Sallie Bright
/in /by Sallie Bright

Disclosure: This article may contain affiliate links, this means at no cost to you, we may earn a small commission if you purchase a product through them.

Family Mortgages Explained

Getting on the housing ladder has never been so difficult – and for new parents or young growing families, getting help from family may be the only option. But if your parents don’t have the cash for a large deposit sitting in a savings account, how else can they help?

There are several different ‘family’ mortgages that enable parents or other family members to give a helping hand to younger family members who want to get onto the housing ladder but don’t have the large deposit needed.

The first thing to point out is that interest rates are generally higher for this type of mortgage, normally because there is a high loan to value figure (ie. you are borrowing all or most of the money for the new property). Some lenders even offer cashback deals to act as an incentive. The interest rate should not necessarily put you off, but it is something to bear in mind. In a market where property rental rates are far higher than mortgage repayments, and where 100% mortgages are both expensive and hard to find, interest rates are often less of a concern. However, every situation is different and there is no substitute for expert individual and independent advice.

So how do family mortgages work?

Family mortgages – unlike ‘springboard mortgages’ (which we mention further down) use the equity in the parents’ (or other family members’) house as security on the new mortgage.

It is also important to point out that using these family mortgages does not mean that the helping family owns any part of the property. The mortgage will still be in the names of the first-time buyers.

At this moment in time, there are only a handful of family mortgages on offer, but as mentioned, availability and offerings change with great regularity within the mortgage arena. Below we detail three of the main products:

The Family Mortgage  requires the purchaser to have a 5% deposit, which can be gifted from family, as well as security offered by family savings or using a property as a guarantee.

The Family Deposit Mortgage requires helpers to have an existing mortgage with Nationwide – and instead of depositing funds into a savings account, the equity in their home is used as security. This could put their home at risk if payments aren’t made, but it does mean they don’t have to stump up any actual cash.

The Family Link Mortgage is similar. The Post Office lends 90% of the property value, with the other 10% coming from equity in the helper’s mortgage-free home. The 10% must be paid back within five years.

Family springboard mortgages

‘Springboard’ mortgages are another kind of mortgage that requires a family member or members to deposit funds into a savings account, where they are held for anywhere between three and five years. As long as payments are met, the money is returned, usually with a favourable interest payment. These include the Barclays Springboard Mortgage and Lloyds Lend a Hand Mortgage.

Any other options

There are also another couple of options. A mortgage with a guarantor requires a family member to secure your mortgage with assets such as savings or their own property. It can be risky for the guarantor if repayments aren’t made.

A mortgage with a gifted deposit is where the family member gives you the money for a deposit. In this case the lender will want to check that the money comes from a credible source – such as their savings – and not from a loan from elsewhere.

Joint tenants or tenants in common

Another thing to consider is whether you are ‘joint tenants’ or ‘tenants in common’. Joint tenants hold an equal share of the property, and full ownership automatically passes to the other. If one of you (or your family) has invested more cash than the other, it is possible to divide your ownership rights to reflect this, in a ‘tenancy in common’ agreement – if you die, your share of the property will go to the person named as your recipient in your Will.

As you can see, there are a number of different options available, depending on the borrower’s and the helper’s circumstances, so it is important to get advice before committing yourself.

If you would like to discuss family mortgages or any other financial matter, J Finance Ltd will be happy to help. Please contact us without obligation.

Established in Berkshire in 2004, J Finance Ltd is one of the leading financial planning companies in the area. They serve clients across England and Wales. If you would like to discuss your mortgage or protection, please contact them on 01635 521 300 or email [email protected] You can find out more about J Finance on their website at www.jfinance.co.uk.

YOUR MORTGAGE IS SECURED ON YOUR HOME, WHICH YOU COULD LOSE IF YOU DO NOT KEEP UP YOUR MORTGAGE REPAYMENTS. BE AWARE THAT INTEREST RATES MAY CHANGE SO ENSURE YOU CAN KEEP UP REPAYMENTS.

The CRITICAL protection families seem to miss!

Justin Fordham
/in /by Justin Fordham

Disclosure: This article may contain affiliate links, this means at no cost to you, we may earn a small commission if you purchase a product through them.

At MyBump2Baby we are proud to work closely with financial advisors throughout the UK to help raise awareness on the importance of family protection.  Today we have an expert article from Justin Fordham, our financial advisor in Norwich.

You always hear people talk about mortgage protection, but that is only half the equation when it comes to protecting your home and family.

This is especially true if you have a dependant adult, someone who is disabled, or if you have young dependent children.

The problem is not many people know what the other side of this equation is!

So let me take you on a quick journey…

We have a married couple with 2 kids. Dad earns a respectable £2000pm and mom looks after their 2 children, but also works part time and brings home another £500pm. So, the total income into the home is £2500, which is great.

Their monthly household budget.

•£750pm for their reasonable sized mortgage

•£1042pm on other general house expenses (Council tax / Elec / Gas food etc)

•£300 pm for child care etc (this is being conservative in most cases)

£2092 Total monthly outgoings

•£2500 income, minus £2092 outgoings = £408pm spare for savings and fun.

All looks good so far, right? …Or is it??

Scenario 1 – What if Mom unfortunately passes away?

•Dads’ income stays at £2000, but moms income disappears, so the total Income into the home is £2000pm

•Outgoings are £2092, but the mortgage has been cleared by a mortgage protection plan. So, this reduces the outgoings to £1342pm.

•£2000 income minus £1342 outgoings means dad still has a net income of £658pm. Still looking good?

•BUT, does dad now need extra child care given mom passed away? How much will that cost? Does dad need to give up work to look after kids? Does dad need to go part time? Will dad continue to earn enough to support the house? Does dad need to work more hours to support the house, but how does he do this with 2 dependent children?

Scenario 2 – What if Dad unfortunately passes away?

•Moms’ income stays at £500pm, but dads’ income is now Zero. So, the total Income into the home is only £500pm

•Outgoings are £2092, but the mortgage has been cleared by a mortgage protection plan. So this reduces the     outgoings to £1342pm.

•£500 income minus £1342 outgoings means mom now has a negative budget of MINUS £-842.

•How does mom put food on the table? How does mom pay the running costs of the house now? Does mom need extra childcare so she can go to work full time to support the home? Does mom need to work more to support the house, but how does she do this with 2 kids?

When it comes to Family Insurance, most people are ill advised, and almost always under insured.

What people don’t realise is there are really affordable options out there, like a Family Income Benefit policy, that could easily prevent the dire consequences of examples above.

If these clients were both 30 years old, fit & healthy and non-smokers. In order to rectify this shortfall in their budgets, it would have only cost them around £11.00pm!

Don’t underestimate the value of professional advice when it comes to protecting your home and your family.

That little bit extra you might pay for the correct cover, could make the world of difference to those you leave behind!

If you wish to contact me for a no obligation chat, please feel free to do so via email: [email protected] or via phone on 0345 50 88 588 or 07813 255267.

 

About me and JF Financial Associates 

My name is Justin Fordham – the mortgage and insurance expert at JF Financial Associates. South African born, but English by heritage. I have a lovely wife Joelle and two very crazy dogs that keep us out of mischief and very fit.

I have worked tirelessly over the years ensuring we only offer the highest quality advice, an exceptional service to every individual client and we have remained unwavering in our belief that each client should be treated as if they were a family member. There is only one type of advice provided at JF Financial Associates and that is “Honest advice every time!”

If you would like to discover what our clients say about us, please feel free to read my client Testimonials or Google reviews..

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