Maternity Leave & Mortgage

[adamskatie]

Hi,

Just wondered if anyone could help. My LO is coming up to 4 months and I am employed by a company - I got 90% pay for the first 6 weeks and now down to SMP.

Ideally I wanted to take a year off (so go back to work end of January 2012).

My dilema is that our mortgage is up for renewal at the begining of December 2011 (2 months before I wanted to go back to work) so I thought I'd start doing my homework now and try and understand what would work for us in good time.

A mortgage broker has just called me back from Money Super Market and we went through some details about how much the house is worth, the current outstanding loan and obviously our earnings. I explained that I had just had a baby and that I will be on maternity leave at the time of applying with no income apart from Child Benefit and a very small amount of Family Tax Credits - the conversation sort of cut short at this point because he said I need to be earning an income to attract a wider variety of lenders in the market who will then in turn offer us a better rate / package.

Is this right?! So just because I wanted to be a SAHM we wont get the same rates as if I was back at work?!

I'm so confused!

 

[Mrs Doddy]

Im not sure - this was our worry, we rang our lendor and they said that as long as we re-mortgage with them they will not look into our current finances / bank accounts - we are with a lendor that generally is good so we will hopefully stay with them

not sure if this helps - its all crap tho isn't it x

 

[Mabelpye]

It is right that depending on wages etc, depends on how good of a rate you would get. If you were earning more, the interest rate would be lower because you are deemed as "less of a risk" and vice versa.

You can look at renewing your current mortgage deal up to 6 months in advance as well. I'm not sure if that would help any

Good luck

xxxx

 

[Kempf]

I don't think the broker is entirely right, you are maternity leave reason there is no income but you do intend to return to work and wouldbe earning....i think another option is to speak to your current lender's financial planning team or your bank. BUT if it really you wouldn't get a better rate or package may be you wait when you return to work frm maternity leave...so to keep your chances up

 

[anne003]

Hi adamskatie

I have worked as a mortgage broker for the last 5 years 3 of those for a high street bank. Most lenders will usually use the income you will be receiving once you go back to work after mat leave ends, I always ask my customers to request a letter from their employers stating what their job role is, whether it will be part or full time, when they are due to go back and what the salary will be. Most underwriters would want to see this before approving the mortgage. Generally your income doesn't influence the deal or rate you will get as that is based on how much you are borrowing against the property's value (ie the less you are borrowing against it the less risk to the lender so better rate) your income will determine how much they can lend to you.

Hope this helps...feel free to PM me if you need to know anything else!

 

[adamskatie]

Hi adamskatie

I have worked as a mortgage broker for the last 5 years 3 of those for a high street bank. Most lenders will usually use the income you will be receiving once you go back to work after mat leave ends, I always ask my customers to request a letter from their employers stating what their job role is, whether it will be part or full time, when they are due to go back and what the salary will be. Most underwriters would want to see this before approving the mortgage. Generally your income doesn't influence the deal or rate you will get as that is based on how much you are borrowing against the property's value (ie the less you are borrowing against it the less risk to the lender so better rate) your income will determine how much they can lend to you.

Hope this helps...feel free to PM me if you need to know anything else!

Anne003, thank you for your advice - that really helps me. I'm meeting my manager for lunch tomorrow so I'll see what my working options are then I guess and I can go from there.

If you dont mind - I will PM you if I have any questions!

Thank you for your help x

 

[anne003]

No problem...good luck for tomorrow and by all means ask away if you need any more info!!

 

[DanielaB]

Hi adamskatie

I have worked as a mortgage broker for the last 5 years 3 of those for a high street bank. Most lenders will usually use the income you will be receiving once you go back to work after mat leave ends, I always ask my customers to request a letter from their employers stating what their job role is, whether it will be part or full time, when they are due to go back and what the salary will be. Most underwriters would want to see this before approving the mortgage. Generally your income doesn't influence the deal or rate you will get as that is based on how much you are borrowing against the property's value (ie the less you are borrowing against it the less risk to the lender so better rate) your income will determine how much they can lend to you.

Hope this helps...feel free to PM me if you need to know anything else!

Dear Anne3,

I'd love to ask you some questions. We let slip to our solicitors about being pregnant, and now they have sent us a form asking that we specifically give them permission to tell the lenders (NatWest). The mortgage was offered last month... and we are 3 weeks away from exchange / completion / due date. The whole mortgage is in my name - my husband is self employed - and I'm worried now that it will all fall through. I can't believe that the mortgage company would refuse me, but after reading all the horror stories online I'm getting worried. Do you have any experience with NatWest, with what they might ask for?

Thanks in advance!
xD

 

[womblemum]

Mortgages are based as much on affordability as loan to value nowadays. Some mortgage companies (increasing numbers) deduct childcare costs as a formal living cost along with loans, credit card debts, student debts etc. Most will also make you write down your monthly outgoings on food/utilities etc also.

Mortgage applications generally look at your last 3 pay checks so if you are on maternity leave you will unfortunately have to provide the most recent - even though you are only on SMP.

Your current provider will probably not ask for as much information as a new lender.

With regards to mat leave income vs 'normal' wages, some mortgage providers will work on the basis that although you state that you will return to work they cannot assume this so your 'normal' income will not be considered unless you have already gone back to work.

Sorry not to be a massively positive help but hopefully this is useful for clarification. I have postponed remortgaging until June and I have a staff mortgage with my bank employer(!!!!).

 

[womblemum]

"Dear Anne3,

I'd love to ask you some questions. We let slip to our solicitors about being pregnant, and now they have sent us a form asking that we specifically give them permission to tell the lenders (NatWest). The mortgage was offered last month... and we are 3 weeks away from exchange / completion / due date. The whole mortgage is in my name - my husband is self employed - and I'm worried now that it will all fall through. I can't believe that the mortgage company would refuse me, but after reading all the horror stories online I'm getting worried. Do you have any experience with NatWest, with what they might ask for?"

I used to work for RBS/Natwest and they are being forced to be quite risk averse. I would recommend you talk to them yourselves as soon as possible because your lawyers has to disclose this information to them if they are working on behalf of the bank also. It may be worth exploring putting in a joint application despite the self employed thing just to bolster your income etc - although i wouldn't recommend tinkering with your application unless you have to this close to completion!

 

[katnav]

We have just moved into a new house and I am at the end of my maternity leave. It did make it difficult to find a mortgage. About 4 banks we tried to get a mortgage with refused us as I wasn't earning enough, one bank would lend us but wanted evidence of savings that would be used to cover mortgage payments until I was back at work. We ended up going with Nationwide who were brilliant, all they needed was a letter from my employer and myself stating that I was returning to work, what date and what my salary would be. So in answer to your question, yes you may find you can't have the best deal if that bank is difficult about you being off work.

Best of luck