Back to Inspire Home

Getting a mortgage when you’re pregnant or on maternity leave

The home loan process can be daunting enough without throwing pregnancy into the mix. We explain how you can go about getting a home loan or refinancing your loan if you’re going on parental leave.

Can I get approved for a home loan while pregnant or on maternity leave?

The short answer is yes, it is possible. However, depending on the lender, it can come with extra requirements that can make the process a lot less straightforward than normal.

For that reason many parents choose to wait until they are back at work before applying for a home loan or attempting to refinance.

Home loans can be trickier for expectant parents because some lenders will consider you a high risk borrower if you’re going on parental leave. They may charge you a higher home loan interest rate as a result.

Why? Borrowers who are not working are deemed as high risk to a lender. This is because your capacity to make home loan repayments could be impacted while you’re on leave depending on how much leave you intend to take and if your employer offers paid parental leave.

While there are legally enforced paid parental leave requirements, these are minimal and may not apply to parents seeking to take extended leave.

Lenders will also consider an anticipated increase in your expenses tied to having a new child including everything from nappies to daycare. In the eyes of a lender, the impact on your expenses means you’ll have less money to repay a home loan, especially if rates rise.

To help assess your suitability for a loan, lenders will want to know:

  • If your parental leave is paid or unpaid
  • The date you plan to return to work
  • Evidence (e.g. a letter from your employer) stating the terms of your parental leave, and that you will return to work by a certain date

Wondering how much you could borrow?

Calculate your borrowing power based on your income.

Calculate now

Can lenders ask me if I’m pregnant?

When you’re applying for a home loan, lenders cannot legally ask if you are pregnant or if you intend on taking parental leave, because it could be deemed discriminatory under the Sex Discimination Act.

Lenders also can’t refuse to give you a loan or give you an unfavourable loan because you’re pregnant or because you could become pregnant.

However, lenders can ask you if you expect any changes in your circumstances in the near future. This is because lenders have a responsibility to ensure that you as a borrower have the capacity to repay a home loan.

By asking about any foreseeable changes to your life – like having a baby – a lender is finding out if there’s anything that may impact your ability to pay back your mortgage.

It’s in your best interests to be upfront in your home loan application if you are pregnant or you intend to become pregnant soon, because this will likely majorly impact your finances. Otherwise, you may end up with a loan you can’t service, which can put you in financial strife.

How can I increase my chances of getting approved for a home loan while on maternity leave?

Lenders will typically consider paid parental leave and potentially government parental leave as income during your leave period. It can help your chances of being approved if you provide proof of the amount you’ll receive during this time.

Unpaid leave on the other hand isn’t viewed too favourably by lenders, as it essentially means you’ll be receiving no income for an extended period of time.

Either way it’s always worth saving and keeping a buffer fund to cover any unexpected expenses or if you choose to extend your leave period. It’s a good idea to discuss this with a financial or mortgage expert.

Borrowing with a partner will also look better in the eyes of lenders, as there will likely be another income source available to repay your loan while one of you is on parental leave.

Get a free property report in seconds

Search an address for price estimates and sales history.

Search a property

What extra documents do I need to provide when applying for a loan while pregnant?

If you plan on applying for a loan while you’re pregnant there are a few extra requirements you’ll have to meet. It’s best to make sure you talk to a Home Loan Specialist or the lender you intend on applying with to assess the likelihood of your loan being approved.

You’ll need all of the usual home loan documentation, plus a bit of extra information. This will likely include:

  • A letter from your employer containing your return to work date, the terms of your employment (i.e. full time or part time) and your income during your leave period
  • Payslips from the three months prior to going on parental leave
  • Proof of living expenses during parental leave, including childcare, healthcare etc.

Can I refinance my home loan while I’m on parental leave?

Refinancing while on parental leave is very similar to applying for a home loan on parental leave – it is possible, but lenders will likely view you as a higher risk borrower. This may affect your chances of being approved or incurring a higher interest rate.

However, depending on your reason for refinancing, it’s worth talking to your lender or Home Loan Specialist to see what sort of flexibility they can provide while you’re on parental leave.

Can I reduce my repayments while on parental leave?

It all depends on your lender. Some lenders will allow you to reduce your repayments, while others may allow you to make interest only repayments for your leave period.

Some lenders will even provide repayment holidays while you’re on parental leave. But, there are often specific conditions for these flexible arrangements.

For example, some lenders may need you to have had your loan for 12 months or more, and might require you to make extra repayments before your leave so these can cover the repayments you’ll miss while on a repayment holiday.

You’ll also need to be able to prove when you’re returning to work, as well as the amount of money you’ll be earning when you do so.

If you are looking to apply for a home loan or refinance while on maternity leave it’s always helpful to speak to an expert. Lendi’s Home Loan Specialists can help outline your options. Book an appointment at a time that suits you.

What could your home loan repayments look like?

Calculate your loan repayments

$
%
years

Got a home loan question? Just ask!

We're here to help. Get free expert advice at a time that suits you. Choose a time to chat with a Home Loan Specialist here

The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.

Tags: home loan, new purchase, refinance, parental leave

Check today's low rates

Tell us what you are looking for and see if you can save.

Search rates

Check today's low rates

Tell us what you are looking for and see if you can save.

Search rates
Home loan repayment saver tool

Home loan repayment saver tool

Enter a few details about your home loan and see how much you could save on your repayments

Important legal stuff

Lendi is the trading name of Lendi Pty Ltd (ACN 611 161 856), a related body corporate of Auscred Services Pty Ltd (ACN 164 638 171, Australian Credit Licence 442372). We will never sell your email address to any third party or send you nasty spam, promise.
# Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.
Lendi is a privately owned and operated Australian business. Our mission is to change the way Australians get home loans by providing a faster, smarter and more secure home loan experience designed around the customer’s convenience and needs. Although Lendi compares over 1600 products (2,500+ products including feature and pricing variations) from more than 35 lenders, we don't cover the whole market or compare all features and there may be other features or options available to you. While Lendi is 35% owned by founders and employees, we have also been supported by some great minority shareholders including Bailador, Macquarie Bank Ltd and a number of Australian sophisticated investors.
*WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years. Fees and charges apply. All applications are subject to assessment and lender approval. Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.
IMPORTANT INFORMATION: Loan terms of between 1 Year and 40 Years are available subject to lender and credit criteria. Maximum comparison rate will not exceed 14.99% (see comparison rate warning above). Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn't take into account any product features or any applicable fees. Our lending criteria and the basis upon which we assess what you can afford may change at any time without notice. Savings shown are based on user inputted data and a loan term of 30 years. All applications for credit are subject to lender credit approval criteria.
Made with love at Circular Quay in Sydney, Australia. © 2022. All rights reserved.