Maternity leave is a big life change, and it’s natural to wonder how it will affect your mortgage or remortgage plans. At The Mortgage Social, we understand the financial concerns that come with this exciting time. Whether you're looking to remortgage or secure a new mortgage, here’s what you need to know about how maternity leave might influence your application.
Remortgaging During Maternity Leave: Your Options
When it comes to remortgaging, you typically have two main options:
Option 1: Product Transfer with Your Current Lender
A product transfer means switching to a new deal with your existing lender. They will offer you different products, such as fixed-rate, variable, or tracker mortgages.
Benefits of a product transfer:
No need for a new application: You won't have to submit additional documents, undergo a credit check, or go through an affordability assessment.
Quick and easy: Since the lender already assumes the risk, it’s a hassle-free process, making it an ideal choice for many borrowers.
Drawbacks:
It might not always offer the best rates on the market. While it’s more convenient, you may find better deals by switching lenders.
Option 2: Remortgage to a New Lender
Choosing to remortgage with a new lender involves a more in-depth process. You will need to submit documentation such as bank statements, payslips, ID, and undergo an affordability assessment. There may be legal and valuation fees involved, though The Mortgage Social can help you find lenders who cover these costs.
Benefits of remortgaging to a new lender:
You may find more competitive deals that save you money in the long run.
Lenders may offer incentives, such as covering valuation fees.
Drawbacks:
The process is more detailed, requiring time and paperwork, and you will need to undergo a new affordability assessment.
How Maternity Income Affects Affordability
One of the key questions when remortgaging or taking out a new mortgage during maternity leave is how your reduced income will affect affordability. The good news is that most lenders base their affordability assessment on your ‘return to work’ income.
This means:
Your income during maternity leave is not the primary factor; lenders will use your projected salary when you return to work.
You’ll need to provide details of your return-to-work plan, including confirmation from your employer if required.
Consider Childcare Costs
When planning your mortgage or remortgage, keep in mind that childcare costs and other expenses will increase after you return to work. Lenders will factor these outgoings into your affordability calculation, so it's important to have a clear understanding of how these costs will impact your budget.
Is It Worth Securing a Mortgage Before Maternity Leave?
Some couples consider securing a mortgage before going on maternity leave to avoid potential complications with affordability assessments. This can be a good strategy if:
You want to lock in a favourable interest rate.
You expect your income to temporarily decrease during maternity leave.
However, with many lenders assessing based on your return-to-work income, it’s not always necessary to rush. A The Mortgage Social can help you explore your options and find the best time to apply based on your unique circumstances.
Maternity leave doesn’t have to hinder your mortgage plans. Whether you’re looking to remortgage or secure a new mortgage, the team at The Mortgage Social in Warwickshire can help guide you through the process, ensuring you get the best deal while considering your future financial needs. Contact us today for friendly, expert advice tailored to your situation.
🏡 Your home may be repossessed if you do not keep up repayments on your mortgage 🏡
🏡 You may have to pay an early repayment charge to your existing lender if you remortgage 🏡
🏠 Your property may be repossessed if you do not keep up repayments on your mortgage 🏠
☔️ As with all insurance policies, conditions and exclusions may apply ☔️
☔️ The cost of this insurance depends on several factors, such as your age, where you live & your occupation. As a result, the cost you will pay is based on your own circumstances ☔️
💷Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage💷
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