Buying a home while on maternity leave - First home buyers beware

If your family is growing and you're looking to buy your first home or upsize, here are some words of warning around lending and maternity leave.

  • Lender may not accept maternity leave payments as evidence of income to service your loan
  • If you are pre-approved prior to going on maternity leave, your lender may not honour your pre-approval while on maternity leave
  • Your lender may want to see evidence of your income
  • Would want to re-asses you based on now having an additional dependent, lowering your borrowing capacity.

What this means is that if you were relying on 2 incomes to get finance approved and you lose your salary while on maternity leave (regardless of receiving maternity leave payments), you may not be eligible to obtain finance while on maternity leave. This would be true for most lenders but not all.

Worst case scenario is you thought you had a finance pre-approval but when the lender assesses you for full approval you are declined and may still have a contract to honour,

We have recently been able to put together finance for clients while on maternity leave by choosing the right lender and having the clients prepared financially. By presenting the loan application in the best light to the lender made the difference between approval or declined.

There are a couple of lenders more flexible around acceptance of maternity leave payments but it is a good idea to talk to your broker.