It is a topic even being considered by the Council of Mortgage Lenders and the Building Societies Association which will produce guidance for lenders to ensure they are not treating women unfairly when they apply for a mortgage.
If you’re in the position where you need to move during a period of maternity leave then a lender’s stance can be dependent on the period left before you return to work – Woolwich requires the return to work date to be within one month of the application and Virgin Money requires three months.
For these lenders to take the income into account they require a letter from the employer confirming the return to work date and salary which does mean these lenders are fairly harsh with their policies.
Other lenders show more flexibility; for example, Nationwide has no time restrictions so they will consider an application at any time during the maternity leave and simply request an employer’s reference to confirm the salary on return.
Both Halifax and Santander will generally request the latest payslip prior to maternity leave, a letter from the applicant confirming the likely return to work date, and if on the same basis – full-time or part-time.
Assuming there is no change to terms and conditions the salary from your payslip will be used. Both may also require evidence of savings to cover mortgage payments for the period between the application being made and the planned return to work date.
NatWest will generally ask for the last three months’ bank statements and payslips prior to maternity leave and they will use the basic salary prior to the start of maternity when calculating potential borrowing.
A letter is also required from the applicant confirming when they will return to work and they do not seek the employer to confirm this.
As can be seen policies vary fairly significantly between lenders but importantly this does mean that options are likely to be available whatever your position and I’ve only covered a handful of lenders above.
Finally, it is important to highlight that some lenders will wish to ascertain what childcare costs are likely after the applicant has returned to work and this can impact potential borrowing but again some lenders are more flexible than others in this regard.
Equity Release on to Mortgages and Maternity Leave
“Mortgage lenders want to make loans — that’s why they’re in business. However, they all sell their loans (even the big banks), so they do want to be sure that the loan will be purchased by an investor after the loan is made,” Fleming explains. “Because of this, some lenders are more conservative than others and less flexible in lending to someone on any sort of leave.”