605,479 babies were born in England and Wales in 2022*, so it is not surprising that remortgaging while on maternity leave is a concern for many women.
If you are expecting a baby or have just had one, then your financial circumstances are likely to be drastically different than they were when you did your last mortgage application.
Why does being on maternity leave affect remortgaging?
The amount of your mortgage is directly linked to your household earnings. Your mortgage lender has to make sure that your household’s total monthly income can cover all of the household’s essential outgoings including the mortgage payments.
Your household income is likely to be much lower when on maternity, leave particularly if you only receive statutory maternity pay. Mortgage lenders may take your new income amount into account when determining how much mortgage you can borrow. However, there are some lenders in the market who will lend to you based on your pre-maternity leave salary on the basis that you will be returning to this salary after your maternity leave ends.
To avoid getting rejected for a mortgage which will negatively impact your credit score, you should make sure to seek help from a mortgage adviser.
At Cooper Associates Mortgages, we can advise on a comprehensive range of first charge mortgages from across whole of the market to make sure that you are choosing the right lender for your current circumstances.
Book a no-obligation meeting with a mortgage adviser online.
Make sure to declare your maternity leave to your mortgage lender
Your mortgage lender is unlikely to ask you outright if you are on maternity leave or if you are expecting to go on maternity leave. However, they will ask you if there are any changes in your situation that you will impact your ability to repay your mortgage – maternity leave falls into this category. It is important to be honest with your mortgage lender as providing false information may have negative consequences.
Give your mortgage lender confidence
To improve the likelihood of your lender basing your mortgage amount on your previous salary and to prove that the drop in income is only temporary, you should provide them with proof of your previous income, proof that you are receiving maternity pay from the same employer and a letter from your employer confirming your intended date to return to work and what your salary will be when you return. Many lenders will consider this sufficient proof that you will be returning to the same salary, however it is still important to use a mortgage adviser to help make sure that your application goes as smoothly as possible.
In some cases, it is easier to remortgage with the same provider as you already have a track record with them and you can simply do a ‘product transfer’.
Should I wait to return to work before remortgaging?
You do not need to remortgage immediately when your fixed rate deal ends, however if you do not then it is likely that you will be moved to the standard variable interest rate which may mean you are paying more for your mortgage in the short term.
Speak to a mortgage adviser
To find out the best options for your remortgage, you can book a no-obligation meeting with a mortgage adviser now.
*ONS, ”Births in England and Wales: 2022’, 2023
Your home may be repossessed if you do not keep up repayments on your mortgage.
