First time buyer mortgage whilst pregnant/on maternity leave

[BuffaloCauliflower]

Hi MN,

Also posted in Money Matters but thought might get more traffic here.

I wondered if anyone has any advice on getting a first time mortgage whilst on maternity leave? DH and I are currently saving manically for a deposit, and should have enough by the end of the year, hoping to buy first couple of months of 2021. We’re also TTC, so there’s a chance if that goes quickly (not looking amazingly likely right now, 5 months already including one early MC) so we might be trying to buy whilst I’m on maternity leave, or at least pregnant. We don’t want to put off TTC any longer, especially as who knows how long that’ll take, and even if I fell pregnant next month we’d still be able to save what we need.

We’d want to borrow less than the top end the mortgage calculators suggest we could get, and I’ve tried doing a calculator including a dependent child, and a projection of what I would potentially earning working part time/paying childminder, and we still fall into the right affordability bracket - though I probably wouldn’t say I was going part time! - but not sure how they consider you on maternity? I’ve seen somewhere that they use half your normal salary for that year? My maternity pay will probably only be SMP, but we can cover all outgoings with DH salary.

Does anyone have any wisdom? Thanks

If you use a mortgage broker they can advise you on which providers are best but on their websites they should all list what they consider during maternity leave. It varies according to each provider, some consider a certain percentage of your pay and some consider it all. You will need to provide confirmation from your employer that you'll be returning to work.

I was in the same situation and had my mortgage approved 4 months before returning from 10 months off. My provider required 3 months of bank statements for affordability checks and they could clearly see we had been budgeting fine during my leave so I assume that gives some peace of mind to them. I was actually in my second maternity leave in 2.5 years so I had to give more P60s than most to confirm my usual salary. I also had already returned part time in between babies so they accepted my part time salary as fine for what we wanted to borrow. Our mortgage was about 20% less than we could've afforded.

Thanks @WTFdidwedo, that’s helpful. I’d like to avoid paying a broker if we can but might be sensible. We both have really good credit ratings including borrowing and paying back, credit cards and paying off, which I know looks good on the algorithms too.

It totally understand, we were the same so we used L&C as recommended by MoneySavingExpert and you don't have to pay them. I think they must get commission on selling protection insurance though but I just told them I didn't want it.

Great tip! Thank you. I always go with what MoneySavingExpert recommends

You often don’t have to pay a broker if the product commission is enough. We had amazing advice from ours and didn’t cost a penny. He got us a fab deal and took care of all the paperwork.

That’s good to know @Megan2018, thank you. I think I just assumed there would be a cost.

Hi OP, Dh and I are about to remortgage my house. I am currently on the last few weeks of my maternity and my broker has told me that I will not be able to get a remortgage on maternity leave pay as it is not reflective of my current salary.
I suggested a formal letter written by my company etc. however the banks want to see the full monthly salary going into my account.
I didn’t quite believe this (and thought it was maternity discrimination!) so I did my own research following advice on MSE, which again assured me that the broker was correct.
I know this may not be helpful in your situation but I just wanted to share my experience with you.
Good luck, OP!

Thanks @MagicKingdom17 that’s helpful. Does seem to be conflicting information as others have got mortgages on maternity?

On a slightly different topic - Natwest’s first time buyer guide suggests we start looking at properties to see what we can afford. Should we do this if we’re going to be in a position to buy for a year? I don’t want to piss people off! Or fall in love with somewhere but not be able to offer

I bought a bigger property during maternity leave. I got a letter from my employer stating my return to work date and full salary. I had to provide bank statements from before maternity showing my wages going in as well as recent ones with mat pay. That was through an independent broker who didn't charge, they were paid through the commission of the product.

Yes I find that really odd MagicKingdom? Just as an example here is Halifax's lending criteria www.halifax-intermediaries.co.uk/print/criteria/mortgage/default.aspx?isfad=0 and NatWest www.intermediary.natwest.com/intermediary-solutions/lending-criteria.html both of whom say they consider full pay based on payslips prior to mat leave.

Also we started viewing around a year before we bought and it helped us narrow down how important certain things were (like two toilets in our case!!) but it took about 4 months for our purchase to go through even though there was no chain and it was being rented by the owners son, but I think they were a bit dodgy

Thanks for those links WTF I’d hunted but couldn’t find the affordability criteria. Definitely sounds like they’ll use my normal salary.

Maybe we will have a look. I already have a pretty good idea of what our options will be and in what price range though, as we want to stay in a very specific area and Ive been watching Zoopla for years!

I will dream of two toilets but probably not till the next move. I’ve never lived anywhere with more than one though so I’ve learnt to cope

Though getting out of our lease will likely be an additional problem. We have a break clause next year which is what we’re aiming for, but I’ve got no idea what we’ll do if we can’t line up buying with that date - which I appreciate is very unlikely to happen. I’ve sort of filed that one under ‘cross that bridge when you come to it’ but will probably be begging our landlords for a favour

Sorry to hijack your thread, OP, but that’s really interesting that others have had different advice to me.
I’ve spoken to First Direct, NatWest, Halifax and Newcastle BS who have all said I need a month’s salary & pasyslip.
It doesn’t really matter now as I have arranged to cut my maternity leave short but feeling a meh about that now!

We're curt eating for a decision from Nationwide but have been told by several brokers that it would be counted a discrimination so, really it's all about your salary before ML

Most lenders will want to know what you plan to return to work on and any child care costs. This will then be used in affordability. Lenders have to be seen as being responsible when it comes to lending the money for mortgages, which is why they ask your income after mat leave and use this for affordability purposes.

@MagicKingdom17 not hijacking at all, it’s a really interesting and helpful conversation to have - might also help others who come across this thread. It does seem like your advice has been quite contradictory, even to the affordability guidelines WTF shared. Could it be to do with your overall affordability being low and this just being an extra factor?

@Xyzzzzz as they should be! I’ve done a calculator with my projected 3 days a week post maternity pay and expected childcare costs and it does give us less but still enough for what we’d need

I moved whilst on maternity leave and had no problem getting a mortgage. It may have helped that my new mortgage provider was my bank so they had ample evidence of previous pay and budgeting. I did need a letter from my employer giving my return to work date.

To follow on this - can anyone give me a sense of what I should be budgeting for fees/other costs for a property that’s about £290,000? Everything seems to be very broad ranges - my guesstimate is about £5000?

Stamp duty+ £2k conveyancers +£500 MB + £750 removal company

Thanks @Mariagatzs12 is that really all? What’s MB? No stamp duty for first time buyers on properties under £300,000. Are there no other lawyer type fees?

Mortgage broker. no, usually the quote includes everything. Sometimes there's an extra for the transfer of money but that's about it (and usually not much)