[Video] Can I Get a Home Loan While on Maternity Leave?

These days, most lenders have maternity leave policies so the answer is YES, they will consider your home loan application if you are going on maternity leave.

In order to consider your application however, you will need to obtain a RETURN-TO-WORK letter from your employer (if you work as a PAYG employee) detailing the following information:

1. Your name
2. Your occupation
3. The start date of your employment
4. Current employment type e.g. Full time/Part time permanent
5. Current salary (Gross, Net, Superannuation)
6. Start date of maternity or parental leave
7. If you receive income during maternity/parental leave, the letter needs to state from what period and how much (e.g. 6 months of half pay + 4 weeks of annual leave etc)
8. Return to work date
9. Return to work salary (Gross, Net, Superannuation). If you go back to work in stages e.g. 3 days per week, then 4 days per week etc, please state the details along with the number of days and the salary
10. The letter must contain the word “permanent” when returning to work. Permanent indicates that you will be getting leave entitlements

The letter must be on the company’s letterhead, and it must be signed and dated by your employer. It can be quite tricky to obtain the above letter. If you find yourself having issues getting this letter from your employer, please contact your Mortgage Broker, and they will advise you on some alternative solutions that may satisfy the Bank.

If you are working as a casual or as a contractor (i.e. you’re not getting paid when you’re on leave), it will be harder to get a loan as you might not get a return-to-work letter from your employer.

If you are self-employed, and your business will continue running, then obviously you don’t need the return-to-work letter but we will need to put a commentary in the loan application if your income will be affected.

Additional to obtaining a return to work letter, you need to find out how much government payments you will receive.

How Will The Bank Calculate My Borrowing Capacity If I’m Going On Maternity Leave?

Generally, your Mortgage Broker will do 2 calculations to work out your borrowing capacity.

One calculation with your return-to-work salary and one calculation without your income at all (if you are NOT getting paid during the maternity or parental leave period).

If there is a shortfall in the borrowing capacity during the unpaid leave time, we will need to make sure you have enough of a saving buffers to mitigate this. Your Mortgage Broker will do this calculation and let you know how much extra savings you need to show to the bank to mitigate this unpaid period. If you’re getting paid during the maternity/parental leave, your Mortgage Broker will need to know the schedule amount (e.g. 10 weeks of half annual leave payment etc) so they can use it in the borrowing capacity calculation.

Your Mortgage Broker will also need to add the new addition to the number of dependants you have, and you will need to include future child care expenses if applicable. If your parents are helping you in looking after the new baby, your Broker can put the day care expenses as $0 in this scenario.

How Will The Bank Find Out If I’m Pregnant?

When you apply for a home or investment loan, you must answer the following questions: Does the applicant plan or anticipate changes to their future financial circumstances that could impact their ability to repay the loan?

If you know you are pregnant and will be taking unpaid maternity or parental leave, this is likely to impact your finances (i.e. less income) and is something you should disclose. Also, when calculating your borrowing capacity calculation, you have to legally disclose the number of dependents and children.

And finally, your Mortgage Broker is always acting in your best interest. They want to make sure that you are comfortable with your loan repayments and not borrowing more than you’ll be able to repay. By discussing the above with your Mortgage Broker, it will help them guide you towards the right mortgage for you and in making sure you’re on top of your finances!