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Yes, and it is more common than people expect. Lenders may accept a mortgage application while you are on maternity leave, and many use your full return-to-work salary rather than your maternity pay, provided your employer confirms in writing that you have a job to go back to and the date you intend to return. Some lenders use the maternity pay you are actually receiving instead, and a few want you to be returning within three months of completion.
What do lenders use as my income on maternity leave?
There are three approaches across the panel. The first uses your full contracted salary on the strength of a return-to-work letter, which is the most generous. The second uses your current maternity pay, which is far lower once statutory maternity pay starts and can cut the loan sharply. The third uses full salary but only if you are returning within a set period, often three months, or asks how you will cover the payments in the meantime. Knowing which lender does which is most of the job on these cases.
What does a return-to-work letter need to say?
It is a short letter from your employer, on headed paper, confirming your job title, your salary on return, your intended return date and the hours you will be working. If you are going back part time, the lender uses the part-time salary. The other documents are the same as any residential mortgage: payslips, bank statements and ID. The full list is in my guide to documents for a mortgage application. This article is part of my first time buyer mortgage hub.
Many lenders use the full return-to-work salary on maternity leave if the employer confirms the job and return date in writing
Some lenders use current maternity pay instead, which can reduce the loan sharply once statutory pay starts
Childcare costs after your return count as a committed outgoing in the affordability calculation
How does maternity leave change the affordability calculation?
Take a couple with salaries of £45,000 and £30,000, where the second applicant is on maternity leave. A lender using full salary assesses £75,000 of household income. A lender using statutory maternity pay assesses £45,000 plus the weekly statutory amount multiplied up, which is a fraction of £30,000. On a rough 4.5 times income multiple the difference in maximum loan is close to £100,000, before outgoings are counted.
Then the outgoings. Lenders ask how many dependants you have and what childcare will cost when you return. A nursery bill of £1,200 a month is treated like any other committed outgoing and reduces the loan. If one of you will stay at home and there is no childcare cost, say so, and expect the lender to ask which income is then dropping out.
Statutory maternity pay is 90% of average earnings for the first six weeks and then a flat weekly amount for the following 33 weeks. Enhanced employer schemes vary, and the lender works from what your payslips show. If you are past the paid period and on unpaid leave, the return-to-work letter matters even more, because there is no current income to fall back on.
Do I have to tell the lender I am pregnant?
There is no legal duty to disclose a pregnancy, and pregnancy is a protected characteristic, so a lender cannot decline on that ground. What the application form does ask, at every lender, is whether you are aware of any change to your income or outgoings that is likely to happen. A planned period of maternity leave and the childcare that follows are exactly that. Answer it honestly. Leaving it off is misrepresentation on a mortgage application, which is a far bigger problem than the question itself, and the lender may in any case spot the change on your payslips.
Can I remortgage while on maternity leave?
Yes, and the first check is a product transfer with your existing lender. A like-for-like product transfer with no extra borrowing normally needs no new affordability assessment, so maternity pay does not come into it. If your current rate is ending while you are on leave, that route often keeps things simple. Product transfer is always the first thing I check on any remortgage.
A remortgage to a new lender, or a product transfer with extra borrowing, is a fresh affordability check, and the same three lender approaches apply. If the timing is flexible, some people prefer to arrange the remortgage before the leave starts or after the return, when the payslips show full salary again.
What if I am not going back to work?
If you have decided not to return, the return-to-work letter is not an option and the lender assesses the household on the remaining income, plus any maternity pay still being received for the weeks it lasts. Some lenders count child benefit and other benefits as income in that case, subject to their own rules. The loan will be smaller, but it is a straightforward case rather than a problem one.
What I see in practice
I have placed a mortgage for a client on maternity leave. The lender worked from her pre-leave salary and a return-to-work offer from the employer, rather than from the maternity pay she was receiving at the time. That is the shape I would expect most cases to take, but it is lender by lender.
Speak to an expert
If you are on maternity leave or about to start it, send me your return date, your salary on return and a rough childcare figure, and I will tell you which lenders use the full salary.
When is it better to wait until after maternity leave?
If the lender you want uses maternity pay rather than full salary, and the loan you need depends on your full salary, waiting until you are back with one or two payslips at the full rate removes the problem entirely. That is a few months, not years, and it may open up the whole panel rather than the part of it that accepts a return-to-work letter.
If you are buying, timing is set by the purchase and waiting is not always an option. In that case the work is in lender choice. The return-to-work letter, the intended date and the childcare figure need to be settled before the application goes in, because a lender that finds out about them at valuation stage will reassess.
Two other checks. If you are on a fixed-term or zero-hours contract, the return-to-work letter carries less weight and the lender wants to see the contract itself. And if your partner’s income alone covers the loan, some lenders assess on that basis and treat yours as supplementary, which sidesteps the maternity question. Which of these fits depends on the loan, the timing and what your employer will put in writing.
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