Are you planning maternity leave, or are you currently off on maternity leave? If the answer is yes, and you are concerned about how this can affect your chances of home loan approval, then read this to understand what will be considered when applying.
Return to work date and role is important
The lender or bank will want to ensure you are coming back to work, ideally at the employer on who you are on maternity leave from.
This can be proven by a maternity leave letter also know as a maternity return to work letter.
This needs to be generated on company letterhead or email.
Most borrowers get this from the HR department or line manager at work.
An ideal maternity leave letter
Most HR departments will be used to providing maternity leave letters. When requesting a return to work letter from your employer, review it to ensure it meets the following:
- It’s on the employer’s letterhead or email address
- It’s signed and dated
- Contain name and contact details of the author
- Has details about dates of maternity leave, including start and end dates
- Specifies any pay rate that may be applicable
- Specifies any role title that may be applicable
- Says if part-time hours will be used when you return to work, or if full-time duties (and pay) will resume.
Savings to tide you over are are important
Banks will want to ensure that you can afford to make your home loan repayments without significant hardship under their responsible lending guidelines.
They will use the return to work letter and bank statements or evidence of funds/savings and that you’ll be returning to your work to confirm that you can afford the loan.
For example, you may have a decline in your household income while you are off work. This reduces your family income by $2,000 per month.
Banks will want to evidence that you have enough savings to ‘tide’ you over the period you are off work and have a dip in your income.
For example, if your household income was down by $2,000, and you were off for 12 months, they would want to see $24,000 in savings. ($2k multiplied by 24 months)
Benefits will be taken into consideration
Any government benefits received will be taken into consideration. This can help evidence some additional income while you are away from paid employment
The good news is that you can get approved while on maternity leave, however extra care is needed to apply with the best lenders that will approve your loan.
Speak with one of our specialist mortgage brokers by giving us a call on 1300733942 or by filling in our online enquiry form to find out if you qualify with one of our 40 lenders.