Parental leave home loans are a specialty of our family owned company, and we’d be more than happy to make your planning just a little easier.
When a lender assesses your home loan application, they look at your income, assets, debts and living expenses before deciding whether they think you can make the repayments. Those figures are likely to change when you have a child and in turn that means your eligibility for a home loan could also change. In a tight lending climate, it crucial to be prepared for your finance in the same way you’re preparing for a nursery and some baby led sleep deprivation. Many of our brokers are parents too, so they get that it’s tough and can absolutely relate to making sacrifices to put family first.
Parental leave home loans can be tricky, so here are some things to consider when applying for lending with a baby on the way:
Changes to your income
A lender needs to know that your income will cover your mortgage repayments, even while someone’s taking time off work to be a new mum or dad. If you’re the primary carer and you plan to leave employment temporarily or indefinitely, the loss of your income will affect your household income. Both parents may be eligible for parental leave. In many cases the parental leave pay will be lower than your regular income. To get an idea of what your new income will be, figure out how much parental leave you plan to take. Also speak to your employer to find out whether they offer any additional entitlements.
When you’re applying for a loan and planning to take an employment break, you may need a letter from your employer confirming your return-to-work income. A lender may also want to assess your savings to cover any short-term deficit in income whilst you’re on parental leave.
Cost of raising a child
When you calculate your expenses, you’ll need to factor in the cost of raising your child. Whatever your income, when you have a child your ongoing expenses will go up. This means you’ll have less money to make home loan repayments, so the amount you’ll be able to borrow may be less. A Mortgage Broker may point you in the right direction to help you forecast what additional expenses may arise.
Cost of the loan
Before deciding on a home loan product, research the likely cost of the loan and the size of the repayments.
The following items will affect your repayments:
- The amount you borrow.
- The length of the loan; the longer the term, the lower your initial repayments will be.
- The interest rate.
- Whether the interest rate is fixed, variable or combined.
Your financial commitments
First, assess your current financial situation by pulling together information about your income and expenses, including any existing loans. What repayments can you afford? Then, using this information, adjust the amounts to reflect your income and expenses after having your child. What does that do to your home loan repayments? Although raising a child will be an added expense, you may find that you can reduce your discretionary costs – such as dinners and holidays. Depending on how much you can reduce, this may even give you about the same financial capacity. You may still be in a position to obtain a home loan, but may not be able to borrow as much as you first thought.
Bernie Lewis Home Loans have access to a number of lenders who want to assist expecting and new parents, but knowing who will lend you money at the best rate and on the best terms is where is gets tricky. Parental leave home loans are best left to our experts, who will place you in the best possible position for an approval.
To discuss your parental leave home loan options with a great broker, call us today on 8300 8300 or simply fill in your details via the contact form below.
*This information is general in nature and does not take into account your personal circumstances