How Lenders Assess Income During Maternity Leave
When you apply to remortgage while on maternity leave, lenders need to assess your income. Your current pay — statutory maternity pay (SMP) of £184.03 per week after the first six weeks, or your employer's enhanced maternity pay — is likely lower than your normal salary. Most lenders will assess your application based on the income you will receive when you return to work, not your reduced maternity pay.
To do this, lenders typically require a letter from your employer confirming your return-to-work date, your contracted hours, and the salary you will return to. If you plan to return part-time, the lender will use your part-time salary rather than your previous full-time earnings.
The FCA's rules require lenders to assess affordability based on your income and expenditure, so demonstrating that your post-return income can comfortably cover the mortgage payments is essential.
Your Legal Protections
Under the Equality Act 2010, it is unlawful for a lender to discriminate against you because of pregnancy or maternity. This means a lender cannot simply refuse your application because you are on maternity leave. However, they are still entitled to carry out a proper affordability assessment, and if your post-return income genuinely does not support the borrowing, they can decline on affordability grounds.
If you believe a lender has treated you unfairly because of your maternity status, you can complain to the lender first and then escalate to the Financial Ombudsman Service (FOS) if the complaint is not resolved satisfactorily. The FOS has upheld complaints from borrowers who were unfairly declined due to maternity leave.
Practical Steps to Strengthen Your Application
Before applying, obtain a letter from your employer confirming the details of your return to work. This should include your expected return date, your role, your contracted hours, and your salary. If you plan to return full-time, make this clear in the letter. If you intend to go part-time, the lender will use your reduced salary.
If you are applying jointly with a partner, their income will be assessed alongside yours, and the impact of your temporary income reduction will be less significant. On a joint application, the lender considers the combined household income.
Consider the timing of your application. If you are close to returning to work, some lenders may prefer to wait until you are back and have received at least one or two payslips at your full salary. If your current deal is expiring soon, a product transfer might bridge the gap.
Product Transfers During Maternity Leave
A product transfer with your current lender is often the most straightforward option during maternity leave. Since product transfers usually do not require a full affordability assessment, your temporarily reduced income should not be a barrier.
Contact your existing lender well before your current deal ends to ask about available product transfers. You can often arrange a product transfer several months in advance, locking in a new rate before your current deal expires.
If your lender's product transfer rates are not competitive, weigh up the convenience against the potential savings of a full remortgage. The difference in rate may be worth accepting if it avoids the complications of a new application during maternity leave.
Important: Your home may be repossessed if you do not keep up repayments on your mortgage. There will be a fee for mortgage advice. The actual rate available will depend on your circumstances. Think carefully before securing other debts against your home.