I wanted to write about this particular subject because recently I had two new clients call me to say that they were hoping to purchase their first home but thought it was bad timing and not possible because they were on maternity leave.
There seems to be a misconception out there that banks and lenders will not give you a loan if you are on maternity leave. This is not necessarily true, but there are some boxes you will need to tick to ensure you meet the different lender policies of which I have listed below.
What are the banks & lenders looking for whilst on maternity leave?
As with all loan applications the banks and lenders want to be sure that you can afford to pay the loan back and take into consideration your income (current & future for maternity leave applicants), current liabilities and monthly living expenses.
When assessing an application that includes someone that is on maternity leave, they are looking for the following:
- When will you be returning to work – a letter from your employer confirming your return to work date and income will be required
- Are you receiving any paid maternity leave from your employer and if yes, for how long
- Are you receiving any Government parental leave
- Do you have any savings that can act as a buffer until such time as you return to work
New client scenario
Jane called me to say her and her husband had found a property they loved and had actually put an offer in on the property but thought it might be impossible to get a loan because she was currently on maternity leave.
I reassured Jane that so long as she was still currently employed and returning to work in the near future, she and her husband had a good chance of securing a loan.
To further confirm this for Jane I asked her if she was still employed and if yes, when was she planning on returning to work. Jane advised she was still employed and would be returning to work in March 2021. This was a good start for Jane and her husband.
The next thing I wanted to confirm with Jane was whether they had any additional savings (over and above what they’d be putting towards the purchase) in case there was a gap from when her maternity and Parental leave payments ended to her start date back at work. Jane advised they had an additional $10,000 put aside so I knew based on confirmation of being able to service the loan they should be good candidates for a loan application.
The good news is that both of my new clients that reached out to me have been successful in securing the loan they need to purchase their first homes because they were able to meet the lender maternity leave criteria.
If you are on maternity leave or are planning on going on maternity leave and need some advice on what is required to secure a loan in the future, call Nikki on 0427 374 155.
This page /newsletter provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances.
