Can You Remortgage While on Maternity or Paternity Leave?

Remortgaging during a period of parental leave can feel uncertain, especially if your income has temporarily changed. Many borrowers wonder whether it is possible to secure a new mortgage deal while receiving maternity pay, statutory pay, or reduced income. The good news is that remortgaging during maternity leave or paternity leave is often possible, but lender criteria and affordability checks can vary significantly.

When considering a remortgage during maternity leave, lenders typically focus on your current income, future earning potential, and overall financial stability. This means that even if your income is temporarily reduced, your expected return-to-work salary may still be considered. However, each lender takes a slightly different approach, so understanding how decisions are made is key.

This guide explains how remortgaging during maternity leave works, what lenders look for, and how affordability may be assessed. It also explores practical scenarios and potential challenges, helping you understand what to expect when reviewing your mortgage options during parental leave.

Can you remortgage during maternity leave?

Yes, it is often possible to remortgage during maternity leave, but approval depends on lender criteria and how your income is assessed.

Many lenders are willing to consider applications from borrowers on maternity or paternity leave, particularly if there is clear evidence of returning to work. In these cases, lenders may base affordability calculations on your pre-leave salary rather than your current reduced income. However, this is not guaranteed and depends on individual lending policies.

Some lenders may take a more cautious approach and assess affordability based on your current income, especially if your return-to-work plans are uncertain. This can reduce the maximum borrowing amount or affect eligibility for certain mortgage products.

It is also important to consider timing. If your current mortgage deal is ending, switching to a new deal with your existing lender may involve fewer checks compared to a full remortgage with a new provider, as affordability assessments may differ.

How do lenders assess income during parental leave?

Lenders typically assess both your current income and your expected future income when reviewing a remortgage during maternity leave.

In many cases, lenders will request confirmation from your employer outlining your return-to-work date and expected salary. This document can play a key role in demonstrating that your reduced income is temporary rather than permanent.

If you are receiving statutory maternity pay or enhanced employer maternity pay, lenders may treat this differently. Some will use an average of your income, while others may rely primarily on your confirmed future earnings.

Self-employed borrowers may face additional scrutiny, as lenders may need more detailed financial records to establish income stability. Consistency of earnings and business performance before and during the leave period can influence lending decisions.

How affordability is calculated when remortgaging during maternity leave

Affordability during a remortgage is calculated based on income, expenditure, debts, and financial commitments, with adjustments made for temporary income changes.

Lenders will look closely at household expenses, including childcare costs, which may increase after returning to work. These costs can reduce the amount you are able to borrow, even if your salary returns to its previous level.

Stress testing is also applied to ensure you could still afford repayments if interest rates rise. This means lenders assess your ability to manage higher monthly payments, which can impact borrowing limits during periods of reduced income.

Existing financial commitments such as loans, credit cards, or other mortgages are also considered. A higher level of debt may make lenders more cautious, particularly when combined with temporary income reductions.

Does it matter if you are on maternity pay or no pay?

Yes, whether you are receiving maternity pay or no income can significantly affect how lenders assess your remortgage application.

If you are receiving statutory or enhanced maternity pay, lenders may still consider your application favourably, especially with proof of your return-to-work salary. This provides reassurance that your financial situation is stable in the long term.

If you are on unpaid leave, lenders may be more cautious. In these situations, they may rely more heavily on savings, a partner’s income, or other financial resources to assess affordability.

Joint applications can sometimes strengthen a case, particularly if the other applicant has a stable income. Lenders may place more weight on the combined household income when making their decision.

Remortgaging with your current lender vs switching lenders

Remortgaging with your existing lender may be simpler during maternity leave, as affordability checks can be less detailed than switching to a new lender.

Many lenders offer product transfers, allowing you to switch to a new deal without a full affordability reassessment. This can be useful if your income is temporarily reduced and may not meet stricter lending criteria elsewhere.

Switching to a new lender often involves a full application, including detailed income verification and affordability checks. While this may offer access to better rates, it can also be more challenging during parental leave.

Borrowers often weigh the trade-off between convenience and potential savings. While staying with your current lender may be easier, exploring the wider market could still be worthwhile depending on your circumstances.

Example scenario: remortgaging during maternity leave

A borrower on maternity leave may still be able to remortgage if they can demonstrate a clear return-to-work plan and stable financial position.

For example, consider a borrower earning £45,000 per year who is currently receiving statutory maternity pay. Their fixed-rate mortgage is ending, and they want to remortgage to secure a new deal. The lender may request a letter from their employer confirming they will return to their full salary in six months.

If the lender accepts this future income, they may calculate affordability based on the £45,000 salary rather than the reduced maternity pay. However, they may still factor in additional expenses, such as childcare costs, which could affect borrowing limits.

If the same borrower had no confirmed return date or planned to reduce working hours, the lender might instead base affordability on the lower expected income. This could limit options or require a lower loan amount.

Potential risks and things to consider

Remortgaging during maternity leave can involve additional considerations, particularly around affordability and financial stability.

One key risk is overestimating future income. If your circumstances change and you do not return to work as planned, meeting mortgage repayments could become more difficult. Lenders aim to account for this, but it remains an important personal consideration.

Interest rate changes can also affect affordability. If you are moving from a fixed-rate deal to a variable rate, monthly payments could increase, especially during a period of reduced income.

It is also worth considering early repayment charges on your current mortgage. These fees can impact whether remortgaging during maternity leave is financially beneficial, particularly if your existing deal has not yet ended.

FAQ: Remortgage during maternity leave

Can I remortgage if I am only receiving statutory maternity pay?

Yes, some lenders will consider applications based on statutory maternity pay, particularly if you can show confirmation of your return-to-work salary.

Do I need proof of returning to work?

Many lenders require written confirmation from your employer stating your return date and expected salary to assess affordability accurately.

Will childcare costs affect my remortgage?

Yes, lenders often include childcare costs in affordability assessments, which may reduce how much you can borrow.

Is it easier to stay with my current lender?

In many cases, switching deals with your existing lender involves fewer checks, making it potentially easier during parental leave.

Can I remortgage if my partner is working full-time?

A partner’s stable income can strengthen a joint application, as lenders assess total household income when determining affordability.

This guide provides general information only. Personalised mortgage advice should always come from a regulated mortgage adviser authorised by the Financial Conduct Authority.