Whoababy: Can I get a mortgage if I’m about to go on parental leave?
You’re pregnant! Congratulations! You’re buying a house? Congratulations! Yes, you read that right – those two sentences can coexist– and we’re about to tell you how.
It’s a common misconception that major purchases, such as buying a house, must go on hold the minute you find out you’re having a baby. But the truth is, like anything, with a bit of preparation and planning, you can still say hello to your dream house while you’re on parental leave and not collecting your regular salary.
Think before you apply.
Working out how you can service a mortgage while on parental leave should be your first step. Take the time to sit down and figure out the shap eof your finances, and how much of your current or future income is required to pay the mortgage while you’re on leave.
If you can see that only one income is required to service the mortgage,that’s great, apply away. The majority of us, however, will need to assess if two incomes are required, so it will pay to see what paperwork is needed to show the bank how you intend to make payments after the mortgage is approved.
What you’ll need to show the bank.
You’ll need to show the bank evidence that you will return to your job at the end of your period of leave, and you’ll need to be specific. Have your employer outline, in a signed letter, the pay rate you will be returning to, the days you will be working, and when exactly you will return.
If you’re entitled to other benefits when you return to work, such as Working for Families and Best Start payments, make sure you show proof of these too with a letter from the IRD.
Covering repayments while you’re on leave.
You will also need to show how you intend to cover the payments while you’re on leave. Have you got a record of savings you can provide? If so, this will work well in your favour as lenders tend to go for applicants with aproven savings history and a good deposit – ideally some additional saving in the bank (such as $20,000), and a 20% deposit.
Thinking ahead…
Lenders will also want to see you have thought about your finances for well after you have returned to work. Keep in mind that most will look favourably on you if you intend to go back to work after six to 12 months of leave.
You will also need to show you have factored into your budget the costs of raising a child – and we know that can be expensive! Sometimes a quote for childcare or similar may be required, or a letter from a family member who will be providing a childcare-like service.
Remember…
All is not lost when it comes to securing a mortgage when your financial situation is about to change. With a bit of forethought and planning, and expert advice from the team at Total Mortgages, you’ll be on your way. Talk to us today to see how we can help.