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Getting a home loan on maternity leave

It's possible to get a home loan while you're on maternity leave, but it may reduce your borrowing power.

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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

$
years
Name Product Interest Rate (p.a.) Comp. Rate p.a. Fees Monthly Payment

loans.com.au Smart Booster Discount Variable Home Loan P&IHome≥ 20% Deposit

loans.com.au Smart Booster Discount Variable Home Loan
2.60%
2.96%
  • App: $0
  • Ongoing: $0 p.a.
$602
Get a low discounted variable rate loan. Requires a 20% deposit. Get your loan processed fast and settle within 30 days.

Unloan Variable Home Loan P&IHome≥ 20% Deposit Refinancers only

Unloan Variable Home Loan
2.64%
2.56%
  • App: $0
  • Ongoing: $0 p.a.
$605
A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.

Ubank Neat Variable Home Loan P&IHome≥ 40% Deposit

Ubank Neat Variable Home Loan
2.64%
2.65%
  • App: $0
  • Ongoing: $0 p.a.
$605
Get flexibility and the option to make unlimited extra repayments with this variable rate loan.

IMB Budget Home Loan P&IHome≥ 20% Deposit

IMB Budget Home Loan
2.84%
2.85%
  • App: $449
  • Ongoing: $0 p.a.
$621
A low-rate, no-frills home loan for borrowers with a good deposit and unrestricted repayments. $0 application fee for eligible borrowers with principal-and-interest repayments and deposits of at least 20%.

Macquarie Bank Basic Home Loan P&IHome≥ 40% Deposit

Macquarie Bank Basic Home Loan
2.84%
2.84%
  • App: $0
  • Ongoing: $0 p.a.
$621
This flexible variable rate loan requires a 40% deposit or equity. Get fast online approval and $0 application fee and $0 ongoing fees.

HSBC Home Value Loan P&IHome≥ 30% Deposit

HSBC Home Value Loan
2.77%
2.78%
  • App: $0
  • Ongoing: $0 p.a.
$616
$3,288 refinance cashback offer
This competitive variable rate loan is available for borrowers with 30% deposits. Eligible refinancers borrowing $250,000 or more can get a $3,288 cashback. Terms and conditions apply.

Greater Bank Great Rate Discount Variable with Family Pledge Home Loan P&IHome≥ -10% Deposit

Greater Bank Great Rate Discount Variable with Family Pledge Home Loan
2.79%
2.80%
  • App: $0
  • Ongoing: $0 p.a.
$617
Pay no deposit or LMI and get a discounted rate with this family pledge loan. Requires a family member to act as guarantor. NSW, QLD and ACT only.

Newcastle Permanent Building Society Real Deal Home Loan P&IHome≥ 20% Deposit

Newcastle Permanent Building Society Real Deal Home Loan
2.87%
2.91%
  • App: $595
  • Ongoing: $0 p.a.
$624
Get up to $3,000 refinance cashback when your LVR is 90% or lower ($2,000 cashback for loan amounts of $250K+ and above, $3,000 for $500K+). Other conditions apply. This variable rate loan requires a 20% deposit and has an offset account.

loans.com.au Smart Booster Discount Variable Home Loan P&IHome≥ 20% Deposit

loans.com.au Smart Booster Discount Variable Home Loan
2.74%
3.22%
  • App: $0
  • Ongoing: $0 p.a.
$613
Home buyers can get a very low discounted variable rate for the first year. Requires a 20% deposit. Add an offset sub-account for an additional 0.10% on your interest rate. Get your loan processed fast and settle within 30 days.

Unloan Variable Home Loan P&IInvestment≥ 20% Deposit Refinancers only

Unloan Variable Home Loan
2.94%
2.86%
  • App: $0
  • Ongoing: $0 p.a.
$629
Investors can get a low variable rate. Apply online and get fast approval. Backed by the Commonwealth Bank.
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