Even with a 20% deposit, young parents are struggling the most to purchase a family home or apartment.
Why? Because banks are rejecting those on maternity leave.
Even with a freelance income, 18 weeks of governmental parental pay and a letter from an employer stating their intention for the individual to work soon in the future, the banks aren’t accepting loans for young mum clients.
For many, this means they are being lefts with a tough decision to make, either spend time with the child or buy a home before the hot market prices them out!
Michelle Coleman, principal of mortgage brokerage W Financial said ‘For those with a steady flow of maternity-leave income, not every lender accepts the full amount when calculating what applicants can borrow’.
Most young mums have starting accepting the fact that they will only be able to buy a house once they are back at work.
Those who are applying when on maternity leave should:
- Try not to have a strong reliance on the maternity leave income in the application.
- Have maternity-leave dates confirmed.
- Look to have consistent maternity-leave income paid across the entire leave period, without any stretches of no income. While some opt for a certain period of half pay and some time with no pay, it’s more favourable to lenders to stagger the leave (for instance, a quarter pay over 12 months).
- Build up as big a buffer as possible to assist when income is lower.
- Use a mortgage broker who knows financial strategies around maternity leave and workshop your options.
- Consider opting for ‘interest only’ during the leave time to provide flexibility.
- Enquire with different lenders as to their policies.
Source: The Age