Get in touch for a free initial chat – we’d love to help!
Get in touch
Getting a mortgage on maternity leave – is it possible?
Whether you’re looking to buy your first home, move home or even remortgage, it can be tough to know where to start.
For those of you who are self-employed, with lenders looking at your income on a year-to-year basis, this can make things even more stressful.
Will lenders penalise you for having time off to be with your little one?
If you’re reading this you may have already been declined a mortgage due to being on (or being due to go on) maternity leave.
In this guide we’ll help you understand what lenders will need and how they’ll assess your income when on maternity (or paternity) leave.
The simple answer is yes, it is possible get a mortgage.
The not so simple answer is, although it’s possible to get a mortgage, getting the amount of lending you need might not be so easy.
The right preparation and the right lender can make a big difference.
There’s no ‘one size fits all’ rule here.
Different lenders will assess your income in different ways.
The good news, contrary to what you might think or might’ve been told, is that there are lenders that won’t automatically base the lending on your reduced income.
At Rosehill, we take pride in building long-term relationships with our clients. We don’t see ourselves as just a mortgage broker, but rather a trusted partner who will be with you every step of the way.
At Rosehill, we take pride in building long-term relationships with our clients. We don’t see ourselves as just a mortgage broker, but rather a trusted partner who will be with you every step of the way.
If you’re self-employed and your latest year’s accounts reflect time off for maternity leave, this can make the application a little complicated.
However, there are lenders who will have what I like to call a “common sense” approach with this, and can potentially disregard this lower income figure.
The same may apply if it were the previous year where you were on maternity leave.
When it comes to getting a mortgage on maternity leave, the main hurdle here is that the lender will want to be comfortable with your return to work arrangements.
They’re particularly concerning with whether you can achieve the same (or higher) income than previous tax years now that you have a child (or multiple children).
The lender will also want to get an idea of how your business will be impacted with you on maternity leave.
Can your business operate without you? If not, what will happen with the business whilst you’re on maternity leave?
That being said, there are lenders that certainly aren’t as flexible and may not disregard your tax return reflecting maternity leave.
This is where a good mortgage broker can come in handy.
If you’re employed, it’s generally a simpler process.
Similarly, providing the lender is satisfied with your plans to return to work on the same terms, lenders can consider basing their lending on your payslips prior to maternity leave.
They may ask how the mortgage repayments will be funded during maternity leave (i.e. partner’s income and/or savings).
Again, there are lenders that may not base your income on your payslips prior to maternity leave, so a mortgage broker can offer guidance here.
Not everyone will be returning to work full time, which is understandable of course.
If this is the case, the maximum lending will most likely be lower.
However this is not always necessarily the case, as your part-time income would be compared to returning to work full-time and potentially having to pay for additional childcare – these may cancel each other out.
When self-employed, returning to work on reduced hours poses further complications, as it’s not usually just a case of a set lower salary you’ll be returning to.
It’s very much a case-by-case basis.
Although we can give a rough guidance – we even have a dedicated page on how much you can borrow – this becomes even more “rough” when we’re dealing with a mortgage when on maternity leave.
Reason being is that some lenders will only take a percentage of your income, whereas others may take your usual income.
On top of this, there’s the lenders’ different affordability calculations when taking into account anticipated childcare costs etc.
As a general rule of thumb, 4.5x your income (including a second applicant where applicable) should give you a very rough guidance on maximum lending, however, I’d recommend speaking with a broker in much more detail.
Speaking of childcare, when applying for a mortgage on maternity leave, you’ll want to factor in what your future childcare costs will be.
This will help ensure that your new mortgage will remain affordable.
In fact, most lenders will require you to factor in future childcare costs, particularly if you are to return to work full-time.
If you already have a mortgage and are now on maternity leave, much of what’s mentioned above will apply to your new remortgage (i.e. how lenders will calculate your income).
However, where you already have a mortgage that could be due to fall onto a much higher standard variable rate, this can cause additional stress.
This makes a good mortgage broker even more valuable, offering the most suitable advice and getting the remortgage process moving quickly to avoid falling onto the higher rate.
Now that you have a new-born child (a dependent), lenders will be factoring this into their affordability calculations, along with any anticipated future childcare costs.
In some circumstances, this may even mean that your maximum lending is below your current mortgage balance.
However, the good news is that most lenders now offer a ‘rate switch’ (otherwise known as a product transfer) option.
This allows you to switch onto a new interest rate, which is usually better than the standard variable rate you’d otherwise be falling on to.
We’re pleased to offer fee‑free advice for the vast majority of residential mortgage applications. For full details, visit our fees page or get in touch.
Access your credit report
As a mortgage is secured against your home or property, it may be repossessed if you do not keep up the mortgage repayments. Think carefully before securing any other debts against your home or property. The Financial Conduct Authority does not regulate commercial buy to lets and some forms of commercial mortgages. You may have to pay an early repayment charge to your existing lender if you re-mortgage
We typically charge between £0 to £999 for our services, which is dependent on the type of application and amount of administration required. Please refer to our terms of business for further information.
The guidance and/or advice contained within this website is subject to the UK regulatory regime, and is therefore targeted at consumers based in the UK. The purpose of any content on this site is to provide technical and generic information and should not be interpreted as a personal recommendation or advice.
We aim to provide the best possible service to our clients. However, if you have a complaint that we’re unable to resolve, please see our complaints policy.
Rose Hill Financial Services Ltd is authorised and regulated by the Financial Conduct Authority. You can find us on the Financial Services Register https://register.fca.org.uk/ under reference 912303. Registered office address: 1 Bell Street, 2nd Floor, London, England, NW1 5BY. Registered in England and Wales. Company registration no: 11997519.
The content on this site is for information purposes only and does not constitute advice. Please seek independent financial advice before taking any action. We cannot be held responsible for the content of any external websites we link to within the content on our website.
We receive a small commission if you use our affiliate link with Checkmyfile. Rosehill Financial Services is not responsible for the accuracy of the information contained within the linked site. Checkmyfile provides a 30-day free trial and then the subscription is £14.99 a month thereafter. The trial or the subscription can be cancelled at any time.
