If you want to take maternity leave, do you have to tell your mortgage lender?

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A few months ago I wrote an article about whether mortgage lenders classed child support payments as income when working out whether or not a mortgage was affordable. I had some emails from SavvyWoman users who wanted to know whether going on maternity leave would affect the amount they could borrow and whether or not they had to tell their mortgage lender if they were planning to take maternity leave.

What lenders do
There’s no consensus on whether or not going on maternity leave (or your husband/partner taking parental leave) will affect the amount you can borrow if you’re buying a property or remortgaging. This is what a number of lenders say:

Cambridge building society:
Does it specifically ask if you’re on maternity leave? No. The society only discusses this if you as the applicant raise the issue.

If you are on maternity leave will that affect the amount you can borrow? No it doesn’t.

Does the lender ask when you plan to return to work? No they don’t.

If you’re not specifically asked about maternity leave, are you asked if your circumstances are expected to change? They ask whether there are any changes in your financial circumstances in the foreseeable future.

Coventry building society:
Does it specifically ask if you’re on maternity leave? No.

If you are on maternity leave will that affect the amount you can borrow? If this comes to light during the processing of an application (eg from wage slips or bank statements), Coventry would ask what your salary will be once you’ve returned to work and assess the loan amount on that figure.

Does the lender ask when you plan to return to work? You’d need to provide an employer’s reference to show the return to work date and salary. Depending on the length of the maternity leave Coventry may ask the how you intend to pay your mortgage during your maternity leave and may ask for evidence of savings, depending on your circumstances.

If you’re not specifically asked about maternity leave, are you asked if your circumstances are expected to change? There is an additional information section at the back of the application form where you’re asked to give extra information that will ‘help the Society in assessing your application’.

Lloyds banking group, including Halifax:
Does it specifically ask if you’re on maternity leave? Halifax does not formally ask whether you intend to take maternity leave, but if you offer the information as part of the mortgage interview it would be taken into account. If you’re already on maternity leave, Halifax would expect you to tell them when they ask about your current employment situation.

If you are on maternity leave will that affect the amount you can borrow? When assessing affordability for a loan where a customer is on maternity leave, the Halifax says it ‘considers someone’s ability to maintain the repayments during the maternity leave’. You would be asked about your intentions for returning to work. Income would be based on your salary before starting maternity leave providing you state that you plan to return to work on the same terms. If you plan to work on a reduced hours basis, for example, you’d be expected to state how much you’d earn on that basis.

Does the lender ask when you plan to return to work? Yes. If you’re applying for the mortgage early in the maternity leave and you’re not expecting to return for a long time, that would be taken into account. However, if you plan to go back to work in ‘a short time frame’ and you think you could afford the mortgage on that basis, your pre-maternity leave income would be taken into account.

If you’re not specifically asked about maternity leave, are you asked if your circumstances are expected to change? Yes, we ask whether customer’s circumstances are due to change in the near future.

HSBC:
Does it specifically ask if you’re on maternity leave? No, but it does ask about your employment status and would expect you to tell it if you planned to go on maternity leave.

If you are on maternity leave will that affect the amount you can borrow? If you’re about to go on maternity leave or are on maternity leave and you tell HBSC that you will return to work on the same terms, normal (pre maternity leave) income will be taken into account.

Does the lender ask when you plan to return to work? Yes. When you plan to return to work could affect how much income is taken into account. If you intend to return to work, HSBC would use your pre-maternity income. If you don’t your income won’t be taken into account.

If you’re not specifically asked about maternity leave, are you asked if your circumstances are expected to change? Yes. If you’re a customer you must tell HSBC if your circumstances are due to change.

Metro Bank:
Metro bank didn’t answer my individual questions but said it would ask if you they anticipate any changes to your income in the foreseeable future.

If you’re on maternity leave when you apply for a mortgage or about to go on maternity leave, they’d ask about your current earnings and whether or not it’s due to change. They may ask for confirmation from your employer about the new (higher or lower) income level.

Post Office:
Does it specifically ask if you’re on maternity leave?
No, It is down to you to say if you are on maternity leave.

If you are on maternity leave will that affect the amount you can borrow? Yes. It will depend on the terms and conditions of your maternity leave. Your income is assessed at the time you apply.

Does the lender ask when you plan to return to work? Yes.

If you’re not specifically asked about maternity leave, are you asked if your circumstances are expected to change? Yes.

Santander:
Does it specifically ask if you’re on maternity leave? This isn’t specifically asked, but this would usually come out in the conversation where mortgage advice is being given. If you are already on maternity leave, this may become obvious from a payslip.

If you are on maternity leave will that affect the amount you can borrow? No, but the key questions are whether you plan to return to work; if so, when; and if so, whether on the same hours as before. For joint applications, we would ask this of both applicants as we can’t make an assumption over which partner might return to work or reduce their hours.

Does the lender ask when you plan to return to work?
Yes. It’s done because Santander needs to assess whether, and how, you would be able to afford their mortgage in the meantime.

If you’re not specifically asked about maternity leave, are you asked if your circumstances are expected to change? This is likely to emerge from discussions e.g. about dependent children or general changes in the future.

Virgin Money:
Does it specifically ask if you’re on maternity leave? Virgin Money asks about absence from employment and reduction of income (maternity/paternity leave, unpaid leave, sabbatical etc.).

If you are on maternity leave will that affect the amount you can borrow? Yes. Both you and your employer must confirm the return to work date and salary. If you can’t do this, then the lower income will be used (the income you’re on during maternity leave or an income that you can demonstrate you will receive).

Does the lender ask when you plan to return to work? Yes, and if you’re expecting a temporary reduction in your income, your return to work salary will be used for affordability purposes as long as you are due to return to work within the next three months.

If you’re not specifically asked about maternity leave, are you asked if your circumstances are expected to change? Yes. You must tell the lender if you know of a change of circumstances that will affect how much you could borrow.

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