Getting a home loan on maternity leave

While difficult, it's possible to get a mortgage while you're on maternity leave. Here's what you need to know.

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From a lender's perspective, applying for a home loan while on maternity leave reduces your borrowing power and makes you a riskier applicant because your income is temporarily reduced.

The good news is that some lenders will approve a home loan or a mortgage increase even though you're not receiving a permanent income. You'll just need to show that you can afford the loan, have a realistic borrowing amount and take the time to find a lender that will accept your application.

Tips for applying for a mortgage during maternity leave

The best suggestion is, if possible, to get a home loan before you need to take maternity leave. Once your lender has accepted your application you're in a safer position as long as you keep making repayments.

But sometimes that simply isn't possible. If you can't avoid applying for a home loan while on maternity leave then here are some tips to help you succeed:

  • Get documentation from your employer. If you're on paid maternity leave you could strengthen your application with a letter from your employer outlining the terms of your maternity leave including your return date, future employment terms (part time or full time, for example) and your salary upon return.
  • Save at least a 20% deposit. It's always harder to borrow more than 80% of a property's value. Having a minimum deposit of 20% will make your application stronger (and you won't have to pay lenders mortgage insurance).
  • Set a realistic budget and loan amount. Work out your income and expenses carefully to make sure you're borrowing an affordable amount. Be sure to consider how living on one income during maternity leave will affect your finances too.
  • Talk to multiple lenders before applying. Don't submit a full application without checking with a lender first. Some may reject your application once they know you're on maternity leave so be upfront about it. Rejected applications look bad on your credit score.
  • Consider talking to a mortgage broker. A mortgage broker has a good sense of which lenders will accept your application and can guide you through the whole process.

What will a lender consider when reviewing my application?

Lenders will typically take into account whether or not you are on paid or unpaid maternity leave as well as your ability to service the mortgage repayments using:

  • Assets such as genuine savings or shares
  • Equity that you have in existing property
  • Government benefits or monetary gifts (if applicable)

Applying for a home loan before taking maternity leave

If you're still working at the time you apply for the home loan then the whole application process will be a lot easier. While your lender has a legal responsibility to ensure you're able to repay the loan they can't knock you back just for being pregnant.

But if you know you'll be out of work soon due to childbirth you have a responsibility to crunch the numbers for yourself and make sure you can repay the loan.

Do the following:

  • Look at how much you're hoping to borrow, how much you earn and your other expenses.
  • Subtract your income from that calculation. Factor in maternity leave payments too.
  • Can you afford repayments in the scenario? Do you have other savings to cover the shortfall?

If the answer is no then you should probably rethink the home loan altogether or borrow a smaller amount. Getting into debt and then immediately missing repayments could be disastrous.

What about taking a repayment holiday if I take maternity leave later?

Some lenders include a repayment holiday feature in certain mortgage products, which allows you to take a break from your repayment responsibilities when you leave the workforce.

Generally, you need to have your home loan for at least 12 months before you can apply for a repayment pause. Enquire with your lender directly to see whether this feature is available.

Need a home loan? Start comparing

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years
Name Product Interest Rate (p.a.) Comp. Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment
Westpac Fixed Option Home Loan Premier Advantage Package
1.99%
3.48% p.a.
$0
$395 p.a.
95%
$554.81
Up to $3,000 refinance cashback.
Lock in a low fixed rate for 2 years and buy your home with a 5% deposit. Eligible borrowers refinancing $250,000 or more can get up to $3,000 cashback. Other conditions apply.
UBank UHomeLoan Fixed
1.75%
2.31% p.a.
$0
$0 p.a.
80%
$537
Limited time offer.
Fix your mortgage for 1 year with a very competitive rate and no ongoing fees. Apply by 30 June 2021 and settle within 90 days to get this low rate.
HSBC Fixed Rate Home Loan Package
1.88%
2.86% p.a.
$0
$390 p.a.
80%
$546.6
$3,288 refinance cashback offer
Lock in a low fixed rate for 2 years and buy your home with a 20% deposit. Eligible refinancers borrowing $250,000 or more can get a $3,288 cashback. Terms and conditions apply.
St.George Fixed Rate Advantage Package
1.94%
3.40% p.a.
$0
$395 p.a.
80%
$551.07
Up to $4,000 refinance cashback
Borrowers with 20% deposits or equity can get this competitive fixed rate loan. Refinancers borrowing $250,000 or more can get up to $4,000 cashback (Other terms, conditions and exclusions apply).
Athena Variable Home  Loan
1.99%
1.99% p.a.
$0
$0 p.a.
60%
$554.81
Owner occupiers with 40% deposits or equity can get this competitive variable rate loan. No upfront or ongoing fees.
Suncorp Home Package Plus Fixed
1.89%
2.85% p.a.
$0
$0 p.a.
80%
$547.35
Lock in a low fixed rate for 2 years. Available with a 20% deposit. Eligible new borrowers can get the annual package fee reimbursed for the life of the loan.
Australian Unity Health, Wealth and Happiness Package Fixed Home Loan
1.89%
2.77% p.a.
$0
$399 p.a.
70%
$547.35
Up to $2,000 cashback.
With a 30% deposit or equity, get access to an 0.10% rate cut and big discounts on credit cards and health insurance. You may qualify for up to $2,000 cashback (Terms, conditions and exclusions apply).
Westpac Flexi First Option Home Loan
2.29%
2.72% p.a.
$0
$8 monthly ($96 p.a.)
95%
$577.55
Up to $3,000 refinance cashback.
A flexible and competitive variable rate loan. Eligible borrowers refinancing $250,000 or more can get $2,000 cashback per property plus a bonus $1,000 for their first application. Other conditions apply.
loans.com.au Smart Booster Discount Variable Home Loan
1.85%
2.21% p.a.
$0
$0 p.a.
70%
$544.38
Get a low discounted variable rate loan. Requires a 30% deposit. Get your loan processed fast and settle within 30 days.
St.George Basic Home Loan
2.49%
2.51% p.a.
$0
$0 p.a.
80%
$593.01
Up to $4,000 refinance cashback
Get this low-rate variable loan with a 20% deposit and pay $0 application fee. Borrow from $150k (or $250k to be eligible for the cashback offer) (terms, conditions & exclusions apply).
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