Do banks accept my maternity income for a home loan?

[Slash12]

Hi Home Loan Experts.

I am currently on maternity leave until August 1st but I may extend the leave unpaid by another two months. I receive $2,000 per fortnight now, which is half of my normal salary. My husband is working in an IT company and gets $55,000 per year.

We’re planning to buy a property before my child is born. We’re looking in the range of $400,000 and have almost $40,000 as a deposit. We tried your "how much can I borrow calculator" and my husband’s income alone isn’t sufficient so, we want to use my income. Can you tell me what my chances are of being approved for a home loan in such a case?

[Otto Dargan]

Hi Slash12. Welcome to the forums.

Most banks will decline applicants on maternity leave income. As the lenders think there’s a risk that they’ll not return to their previous job, will have another baby or because they can only assess your current income.

Although some banks have strict lending policies, we know lenders that will still allow you to borrow and take your maternity income to calculate your borrowing capacity.

You may be able to borrow up to 80% of the property value and in some cases lenders may even lend you up to 90%.

Paid maternity leave is viewed more favourably by the banks. Still, the issue most people face is that they are often only paid half of their normal salary while on leave (which is the case with you), and so most lenders won’t assess your income based on your pre-maternity leave pay.

Give us a call on 1300 889 743 or enquire online and one of our mortgage brokers will give you a call to discuss your situation.

Cheers,

[Slash12]

Well, I am receiving the pay regularly as of now, albeit half. What documents will I need to provide to prove that I can afford to repay the home loan?

[Otto Dargan]

Hi Slash12,

There are certain requirements that you must fulfill, as well as specific documents that you will have to provide.

You will need to provide the following documents:

• Payslips from the last three months prior to going on maternity leave.
• An employment letter which specifies the terms of the maternity leave including your return date and the employment tenure upon return (e.g. full time, part time or casual).

We can help you get approved, even if you’re going on maternity leave.
To discuss your situation with an expert mortgage broker, contact us on 1300 889 743 or fill in our free assessment form today.

Cheers,

[Slash12]

Thanks so much for your help. I will call around next week to see if I can find a suitable lender for my situation.