How Can I Get A Home Loan While On Parental Leave?

A client, Tracy and Nathan, had come to me and were looking to refinance their home loan. There’s nothing unusual in that, except that they had just had their first baby. Tracy was on maternity leave which meant that they were looking for ways to make their finances work for them while dealing with the corresponding reduction in income until she went back to work.

They’d gone to their current lender and had been declined for a new home loan. This isn’t unusual, to be honest. Not every lender wants to do home loans for clients who have one partner on parental leave.

When they came to me, Tracy and Nathan were concerned that they were stuck. Here’s what I explained to them:

If you want to get a new loan while one partner is on parental leave, it can be done but…

You do have to put in a little extra effort. Firstly, you may not get your bank of choice – you have to be willing to shop around to find a lender that can help. Thankfully that’s what we do for our clients at Mortgage World Australia – so they were in the right place because shopping around lenders is hard work.

The next item on the list was getting a letter from Tracy’s employer stating the date of her return to work, her employment status when she returns (e.g. full-time or part-time) and her salary when she returns to work. The lenders that are easier to work with on parental leave loans are all willing to use your return-to-work income to calculate borrowing power even if that income is not being received at the time of application.

We also needed to let the lender know what paid parental leave Nathan and Tracy have access to (from either the government or company) as well as any savings they have to show that they can make their repayments while Tracy is on maternity leave. The lender needed to meet its responsible lending obligations by confirming Tracy and Nathan had enough cash and/or other income to cover the serviceability shortfall until Tracey returned to work.

In the end, we were able to find the right loan for Tracy and Nathan because they were willing to provide the information necessary so we could present their best case for approval to a lender that understands that being on parental leave presents a unique set of challenges.

This policy applies to both refinances and home loans used for a property purchase.

If you need help with getting a loan while on maternity or parental leave then Mortgage World Australia is here to help. Call 1300 661 211 or enquire online at https://www.mortgageworldaustralia.com.au/contact-us/ and we will help you find the right lenders that will give you the best possible chance of being approved all with little to no stress, so you can focus on what’s important.