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Maternity Leave Mortgages: A Comprehensive Guide to Securing Home Loans During Parental Breaks

clock icon December 13, 2023
tag iconApplying for a Home Loan Home Loan Home Loan Myths Maternity Leave Maternity Leave Mortgage Mortgage Broker Mortgage Broker Sydney Mortgage Broking Paternity Leave Sydney Mortgage Broker Sydney Property

Welcoming a new addition to the family is an exciting time, but it often comes with questions about life’s next steps. One common concern is whether it’s possible to secure a mortgage while on maternity or parental leave. This comprehensive guide aims to shed light on the process, addressing common queries and providing valuable insights for those navigating the world of home loans during this unique life stage.

Can You Get a Home Loan on Maternity Leave?

While lenders do take your maternity or paternity leave into consideration, it’s essential to know that it’s not impossible. The key lies in understanding how lenders approach applications during this period.

Key Considerations for Maternity Leave Home Loans

Leave Type Matters

Lenders often inquire about the nature of your leave—whether it’s paid or unpaid. If unpaid, you might be treated as if unemployed, necessitating proof of adequate savings to cover mortgage repayments during the leave period.

Duration and Return-to-Work Plans

The length of your maternity or parental leave plays a role in loan approval. Longer leave may pose challenges, with lenders considering potential changes in employment circumstances. Clearly outlining your return-to-work plans is crucial for a smoother application process. Lenders would likely require a letter from your employer confirming return-to-work details.

Refinancing During Maternity Leave

Refinancing during maternity leave is possible but may come with additional hurdles. Unpaid leave or reduced salaries might lead to decreased borrowing capacity.

How Pregnancy Affects Mortgage Applications

Being pregnant can impact mortgage applications, with lenders perceiving it as an increased financial risk. While lenders cannot directly ask about pregnancy, voluntary disclosure of factors affecting finances is recommended. It increases required living expenses as you are counted as having a dependent, which in turn affects borrowing capacity.

Disclosing Dependents and Additional Documentation

Disclosing the number of dependents, including children, is a standard part of mortgage applications. Falsifying this information could lead to financial or legal consequences. Additional documentation, such as proof of income, employer letters, and details of government payments, may be required during the application process.

Factors Lenders Evaluate During Maternity Leave Home Loan Applications

Lenders evaluate various factors, including the nature of maternity leave, financial contributions from a spouse or partner, return-to-work plans, available savings, government payments, home equity, deposit size, and the number of dependents.

Tips for Improving Approval Chances During Maternity Leave

To enhance the likelihood of mortgage approval during maternity leave, consider applying while on paid parental leave, establishing a clear return-to-work date, boosting savings, applying jointly with a working spouse, staying within affordable borrowing limits, and seeking guidance from experienced mortgage brokers.

Securing a mortgage during maternity or parental leave is indeed feasible with strategic planning and understanding lender considerations. By following the tips outlined in this guide, individuals can confidently navigate the home loan application process during this unique life stage, ensuring a smooth transition into homeownership amidst the joy of a growing family.

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