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It’s no surprise that many parents-to-be want to move to a new house to make room for the arrival of their little bundle of joy.
However, getting a mortgage while pregnant can be tricky. Maternity leave affects applications because many lenders assume that your income will decrease during this time and will base your affordability assessments on the reduced rate of pay.
Does being pregnant mean I can’t get a mortgage?
Being pregnant doesn’t make you an instant write-off; many lenders will be happy to consider all aspects of your individual circumstances before coming to a decision, and some may even be happy to approve a mortgage application based on your full salary.
Experienced, whole-of-market brokers will be able to scour the entire mortgage landscape and fix you up with providers who have a track record of being more lenient about lending to those in your situation, meaning a far better chance of approval.
Do I have to declare my pregnancy when I apply for a mortgage?
Lenders are not allowed to ask you outright whether you’re pregnant or on maternity leave when you apply for a mortgage, as such questions could be considered discriminatory under the Equalities Act 2010.
However, more scrupulous lending requirements mean that mortgage providers are of course entitled to ask about any future changes to your situation and any impact on your income and outgoings – both of which will be affected by the arrival of a baby.
This is because lenders want to do everything, they can to reduce the risk of borrowers taking on debt commitments that could become unaffordable.
Most lenders will also ask about the length of your maternity leave, any salary changes when you return to work, and whether you plan to go back full-time, because again, each of these factors will impact your ability to make your repayments.
How can I boost my chances of getting a mortgage approved when pregnant?
As mentioned, there are lenders out there who are more than happy to consider your full salary. However, many will request that your employer provides a “letter of intent” confirming factors such as:
- You’ll definitely be going back.
- A projected return to work date.
- The terms of work you’ll be going back on.
- Any changes to income.
If a lender has evidence that you’ll be returning to work on the same terms as before, they may be more than happy to approve your application based on your usual salary.
However, if there’s a change to your employment terms they are likely to calculate your affordability with this in mind.
If you already have a mortgage, a good way to get around affordability checks is to find out whether there are any product transfers available from your existing lender. Just make sure you’ll be able to cover the repayments if you go down this route.
Another way to boost your chances of approval is to declare any savings you have which can be utilised during any period of leave. Ensure to disclose this, plus any other factors you feel could help your case, on your application.
I feel discriminated against – what can I do?
A recent survey of 2,002 female applicants aged 25 – 45 has revealed that one in 10 said they felt that “they had been discriminated against by mortgage lenders” over their plans to start a family.
If you feel you’re being discriminated against, take this up with your broker, or the lender if you’re dealing with them directly. Failing that, contact the Financial Services Ombudsman for advice.
I’m self-employed: how will this impact my mortgage eligibility?
As well as looking at your previous years’ earnings, if you’re self-employed, providers will want a thorough understanding of how much your absence will affect your business.
If your presence is necessary to allow the business to function, then the impact on your income will be significant. However, if you have employees that can fill in for you during your leave period, there may be little or no impact on your income.
In the latter scenario, your lender may conclude that your income will not be compromised by your maternity leave, although you will, of course, be required to answer any further questions relating to the matter.
Every single lender is so different in their requirements, which is why it’s so important to contact a specialist – especially if you’re in a more “niche” situation, such as being self-employed but still earning in full while pregnant.
This is a collaborative post.