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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.
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:
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:
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:
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.
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.
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