Finding out that you are due a child is an exciting and daunting time, with plenty to consider before the little one comes along.
There are so many costs to consider that it’s difficult to know where to start, especially if you require home improvements to create safe spaces for your baby to grow up in.
Statutory Maternity Pay often sees household earnings drop, which can make applying for a home loan difficult. However, all is not lost and it is possible to get a home loan before going on mat leave.
Take out the loan before maternity leave
By applying for a loan before going on leave, you can demonstrate to a lender that you are in a good position financially and able to meet your repayments on time each month.
You may even be able to agree to make higher repayments before going on mat leave, and then alter them in line with your income when you are away from work.
Build up your savings
This is good advice at any time, of course, but especially so if you are starting to think about growing your family.
A good pot of savings can be used to go towards loan repayments, in turn maximising the number and quality of improvements you can make to your home in the process.
Limiting outgoings also shows lenders that you are taking positive steps towards controlling your finances and can also make you a better candidate for finance.
Be sure what you can afford
Make sure you run a proper assessment of your finances before committing to a loan.
Many lenders will run affordability checks on new applicants, but this is often dependent on honest disclosure of all your income and outgoings. If you think adding a new monthly repayment might stretch your finances and make it difficult to pay for essentials such as food, power and other utilities, then it’s best not to proceed.
Take a secured loan
Although a drop in finances while on maternity leave may make some lenders less likely to provide a loan, there’s a chance they will be more willing to do so if you apply for a secured loan.
A secured loan allows you to offer possessions as collateral in the event that you are unable to meet regular payments.
Of course, this makes it especially important that you are certain you can fit this into your budget, but it can also give you access to better rates and potentially more money.
Know when maternity leave will end
Not all parents plan their exact date to return to work before taking leave. However, if you already have a good idea of when you will return to work, the hours you will be doing upon returning and what your pay will be, this can give you a better chance of securing finance.
You may need a written and signed letter from your employers stating an agreed return-to-work date as well as the salary you will receive when you’re back.
This gives lenders a clear sign that your affordability status will soon improve and may make you a better candidate for a loan.