Applying for a Home Loan While Wife Is on Maternity Leave

Ljdawg on 03/07/2019 - 21:20
Last edited 04/07/2019 - 14:15 by 1 other user

Hey all,

Long time lurker, first time poster. I have been searching the forums for any info on my question but haven't been able to find anything much regarding this topic.

My wife and I recently had a baby (pretty much the best thing in the world, even with the lack of sleep), and she is coming up to the half way mark of her 12 months mat leave.

We have a decent deposit saved, most likely meeting 80% LVR. However, without factoring both our wages, and having a dependent child, our borrowing power reduces considerably.

We're in the early stages of shopping around, so I just wanted to call on fellow Ozbargainers' collective experience to see if anyone knows which lenders acknowledge maternity leave back to work pay? I think the big 4 might have some policies around it, but wanting to try and get a bit more of a competitive rate with a non-bank lender. Although I would imagine they might have some much tighter lending criteria.

Cheers in advance to anyone that could share their experience or insights.

Financial Home Loan Loan

Comments

  • Ughhh on 03/07/2019 - 21:47
    +8

    Perhaps a broker can help?

    • suti on 04/07/2019 - 08:26
      -1

      Yep broker can help. As the Royal Commission found, some brokers were found to fudge applications so that the applicant got a loan when they may not have otherwise. The sweet incentives of commission…

      • whooah1979 on 04/07/2019 - 09:45
        +2

        Do you want a loan or not? If you do then let the broker do want needs to be done.

  • Godric on 03/07/2019 - 22:02

    There are certainly policies in place to consider maternity leave, typically banks would want to see her current pay while on leave & then the condition's of her return to work, eg if she's going back to pt/ft & what pay

    Perhaps consider Ughhh's advise

  • savage bargain on 03/07/2019 - 22:08
    +3

    As far as I know, none do, and this would be even moreso after the recent royal commission. They don't like seeing anything relating to mat leave for credit - I even had ANZ knock me back for a credit card out of all things with being back at work full time for 3 months after only 12 weeks mat leave with a company I had been working 11 years for (and no gap in my salary either…) I was bo expecting that as I was only chasing a card with a $5k limit for Velocity points whereas I was initially offered a $42k credit limit based on my salary/existing loans until they saw the line items on my payslip.

    On the plus side, if you get a home loan on 1 income only, it keeps things flexible down the track.

    • spackbace on 04/07/2019 - 02:31

      As far as I know, none do, and this would be even moreso after the recent royal commission.

      This

      I've seen the car finance side of things get heavily tightened, can only imagine it would be worse with a mortgage.

      Talk to a broker, plain and simple. Don't take advice from people pre-royal commission.

  • Enzalicious on 03/07/2019 - 22:16

    I’ve been in a similar situation.

    NAB took into consideration my wife’s potential earnings.
    She needed a letter from her employer stating when her Mat leave finished. It was a large loan but we had enough “buffer” as our LVR was 65%

    This was a couple of years back. Lending practices may have changed since then.

  • Ellioty on 03/07/2019 - 22:17

    Certainly can be done. 80% LVR may be required i.e 20% deposit plus purchase costs. Lender will want confirmation of when your wife will return to employment with expected salary. This income will be used in servicing.
    Sticking point may be how you will service the loan if From settlement date up to the point your wife returns to work. Will there be sufficient in capital to draw on after settlement to cover the lack of income? Whether this will be maternity payments or savings or a combination of both until return to work.

  • boomramada on 03/07/2019 - 23:40
    +1

    Went with both ANZ/CBA through broker, they didn't ask anything. All you need is current payslip plus all the other generic information required for bank loan. This is after the recent royal commission. No issues. No letter or nothing needed.

    But I wouldn't recommend to build a house or move house during this period.

  • brendanm on 03/07/2019 - 23:43
    +1

    Broker. This is why we got our mortgage before the wife went on maternity leave, and still working 5 days.

  • jellykingdom on 04/07/2019 - 09:41

    We literally just spoke to the bank (NAB) about this 1 week ago

    They will do you a loan BEFORE, but for AFTER you will need a letter from the employer stating what the new employment conditions are going to be. So my wife is planning to go back after 12 months and probably do 3 days per week (still TBC) so her company would need to provide a letter for the bank saying that is what has been agreed upon, then they'll take that into account.

    Bank manager was fine with applying for a loan 60 days (2 month) before end of the maternity leave

  • Seraphin7 on 04/07/2019 - 10:17
    +1

    The classic case of be careful what you wish for … for years and years people have blamed banks for "giving" them loans they "couldn't afford".

    Guess what?

    The banks are now ridiculously cautious when it comes to credit and servicing requirements such that loans that are entirely reasonable (with an ounce of personal responsibility on behalf of the borrowers) are getting knocked back.

    And we wonder why economic conditions are sluggish …

    • Duram on 04/07/2019 - 11:03

      I think the people complaining were just the sideline sitters. The ones waiting for the housing market to crash, the stock market to crash and laughing at everyone else for being 'stupid'.

      • hikaru78 on 04/07/2019 - 11:22
        +2

        or the idiots who bought 7 properties overextended themselves lost everything and blamed the bank for lending them the money. Then get Maurice Blackburn to sue because they don't understand the concept personal responsibility

        • Duram on 04/07/2019 - 11:48

          Sure, but at least they have it a crack instead of whinging on the sidelines.

          • hikaru78 on 04/07/2019 - 12:50
            +1

            @Duram: Nah they worse. took a crack lost it all them blamed the bank

        • Some Guy on 09/07/2019 - 01:23

          To be fair, they sue because the broker or the bank rep were chasing commissions and modified documents that indicated the lender could afford the loan.

          But yes, there's also plenty who mortgaged themselves to the eyeballs and the house of cards tumbled down when financial circumstances changed (loss of income, couldn't get a tenant, or rental income lower than expected).

  • jdawg on 04/07/2019 - 13:19

    Thanks everyone for your advice, appreciate it. Sounds like a broker is the way to go!

    • brendanm on 04/07/2019 - 13:44

      What's your location?

  • Nick-AzuraFinancial on 08/07/2019 - 14:10
    +1

    I'm a broker myself and can give you the following advice regarding using your wife's income whilst on maternity leave:

    • All the major banks will consider this provided you can mitigate the risk. One way to do this is to show you have funds post settlement to cover the temporary shortfall in income (Provided your wife is going back to work)
    • Are you using gift funds to complete your purchase (ie gift from parents?) This will decrease the strength of your application.
    • Return to work date will also be a factor in determining the strength of your application
    • A return to work letter outlining RTW date, capacity (Eg. full time or part time) and pay will be required from the employer.
    • Tier 2 lenders to look at: ING (existing customers only), Macquarie Bank, Bankwest & St George

    Let me know if you have any more questions.

    Kind Regards,

    Nick

    • Some Guy on 09/07/2019 - 01:32
      +1

      I find the expression "Tier 2 lender" a bit odd. I dunno what makes an institution worthy of Tier 1 status, other than size. I guess some folk will stick with the Big 4 for whatever misguided and irrational perception they've formed.

      A bit like why some deluded souls continue to fly Qantas when there are at least four better and cheaper airlines to fly internationally.

  • audz on 12/07/2019 - 15:20
    +2

    Congrats jdawg! It is certainly the most rewarding experience :)

    I myself (responsibly) maxed out on loans prior to going on maternity leave (once) and a second time before I became self employed as a mortgage broker.

    What Nick-AzuraFinancial has said is spot on. Some funders require the application to be within 60-90 days of returning to work and others are fine from day 1 of maternity leave. Each funder have their "perks" and niches.

    They would also factor in any child minding costs for when your wife returns to work. So keep that in mind.

    Good luck!

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