If you’re applying for a home loan with a baby on board, here’s what you need to know.
Expecting a baby? Congratulations! If you’re in the market for a mortgage, here’s how to put your best foot forward.
Recent media reports suggest that banks may block mortgage applications made by couples who are expecting a baby. However, experts say you need to read between the lines to see if these headlines apply to your personal circumstances.
Whether you’re eligible for a mortgage will depend on your personal situation, explains Aussie Mortgage Broker Pei Chen. It comes down to the planning you’ve done and your ability to communicate that to the lending institution.
While not everyone can get a loan, pregnancy is only one element lending institutions will assess when making a decision, Chen says.
“The bottom line is that you’re eligible for a mortgage even if you’re pregnant,” she says. “Being pregnant won’t see you penalised, though it will be taken into consideration along with your entire personal circumstances. But don’t forget that having a baby isn’t something that happens overnight, so you’ve got time to make a plan to apply for and secure a mortgage.”
The banks will make the decision on whether you’re eligible based on how much you’ve saved, how much maternity (or paternity) leave you intend to take, your financial history and your particular employment arrangement.
Some banks are more willing to consider an expecting couple than others, so approaching a mortgage broker who has all the information at their fingertips can make navigating the situation easier.
Chen recommends making a commitment to your employer about when you intend to return to work after having the baby and getting a letter from your employer stating the arrangement you’ve made. This should be on company letterhead, and include whether you intend to return to work full time or part time.
“If you’ve got the savings in the bank that will cover the shortfall for the mortgage while you’re taking time away from your employment, you’ve got a far greater chance of securing a mortgage if you approach a bank while you’re expecting,” Chen says.
“If your mortgage shortfall is $6,000 while you’re on maternity leave, and you’ve got that amount in savings between you, some lending institutions will look kindly upon your mortgage application,” she says.
Your savings history and proving to the lending institution that you live within your means will help, she says. “If you’ve been living the high life for the past six years, the banks are less likely to take a shine to your application,” Chen says.
Make an appointment with your mortgage broker to discuss your options and find out how to structure your mortgage so it’s manageable when baby comes.
Did you apply for a loan with a baby on the way? How did the bank respond? Tell us in the comments below.