Additional mortgage borrowing to cover income on maternity leave

[twimmum]

I'm in the process of an application to borrow more money on my mortgage to cover work and improvements to my house. I'm on maternity leave and also Built in some money to cover living costs during the period of no pay whilst I'm not getting paid. After the full pay period, I'll be on statutory maternity pay for a while then on no pay. The period in total when I will not be on my full salary pay is 6 months.

The lender is asking questions about when I go back to work and I'm scared now I'll get rejected for the loan. The pregnancy was a surprise and I have a small amount of savings that will cover a couple of months but not 6 so I'm either facing having to go back to work early or take out a more expensive loan.

Does anyone have experience of borrowing against a mortgage on mat leave? Can they discriminate? I'd have no problem with affordability when back at work. Thanks.

How will you meet the repayments when you are not on your full salary? Your repayments will be increasing, but your salary will be decreased.

This will be their concern, and if they aren't confident that you will be able to meet the repayments with enough of a buffer each month, they will reject your application. This is not discriminatory; it is responsible lending.

Not quite the same but we moved house while I was on maternity leave and as a result increased the amount borrowed by £100k. My provider was happy to use my substantive salary and didn’t ask for details about return to work. We used a mortgage broker as they had knowledge of the best providers for unusual circumstances.

Sorry, just to add we were not asked for evidence of savings to cover the mortgage while I remained on mat leave. We stayed with the same provider in the end so I don’t know if that makes a difference.

Some of the money would cover payments whilst on leave. Amounts I could easily pay back once back at work. I'm talking a few grand on a property I have several hundred k of equity in. Is that really irresponsible?

Thanks squadronleader87. Can I ask which provider that was?

Our mortgage lender was very interested in our childcare arrangements once I went back to work after Mat leave, because that would obviously be a significant outgoing on a decreased income. They didn't lend us anywhere near as much as we would have liked, but in hindsight that means we are 'comfortable'.

Depends on the lender and their affordability criteria. Some are far more flexible than others.

Who is the Lender, if you don't mind?

It’s Halifax. Our broker said that TSB and some of the building societies tend to be more lenient towards maternity as well. I was expecting it to be more difficult.

In our case the extra borrowing was balanced by increased incomes since we last took out a mortgage so our loan:income ratio was more favourable.

Hopefully your application goes ok but if not I’d recommend seeing a broker as they’ll have access to providers and deals you wouldn’t otherwise see.

I wasn't on mat leave at the time but was pregnant. We borrowed extra money to do some work to the house and to allow for money to help us out during my mat leave when on smp and unpaid mat leave.

If you're borrowing to pay the bills while you're on maternity leave, try to overpay the extra amount off ASAP or else you will find that you are still paying for mat leave when DC goes to university.

If you are having to borrow on your mortgage to pay your mortgage because you don't want to return to work after six months, then yes the lender is being responsible by asking about your return to work. It isn't about the available equity. If you cannot pay your mortgage then your property will be repossessed. Lenders don't want that to happen and I'm sure, neither do you.
You will need to provide proof that you can afford the mortgage payments and your living expenses, and if you tell them you will be returning to work to make the payments you will be asked about childcare arrangements. If you cannot, then the loan will not be approved. There is nothing discriminatory about it.

It’s just affordability, and as someone else said equity isn’t the issue. They just want to see how you’ll afford to pay them each month. If you can show them that, I don’t think you’ll have a problem.

We remortgaged when I was on maternity leave to release funds for building work. I only had to supply a letter from my employer stating that I was going back to paid employment and confirmation of my salary as I couldn't provide evidence of this as my payslips were just SMP.

During my unpaid maternity we put living expenses (groceries, petrol etc) on a credit card. We were lucky to get a decent balance on a long 0% deal. Once LO starts school and we've not got the same childcare costs, we'll pay it off.
As someone said above, borrowing say £5k now on a 20 year term means you'll still be paying it off when bump is at Uni!