As a working parent, getting a mortgage may seem challenging. Lots of parents worry whether they’ll qualify for a mortgage or remortgage while they’re on maternity or paternity leave, if they decide to work part-time, or are self-employed and they get the most effective overseas mortgage advice and best deals from Finance Advance Centre.
Do you know what is a cash out refinance? A cash-out refinance will replace what you owe on your current home loan with a new mortgage for a higher amount.
Here the team from London and Country Mortgages, who I have used to help me remortgage several times, explain how starting a family can affect your mortgage and how they can help get you the right deal for your situation:
1) Securing a mortgage on maternity leave
Lenders tend to treat mortgage applications from those on maternity leave in different ways. Even if one bases its affordability calculations on the lower income you’ll get while you’re not working, others may be happy to base them on your full pre-maternity salary. Our expert advisers will know which lenders will be more flexible about maternity and paternity leave.
Lenders will also want to see a letter from your employer stating you’ll definitely be returning to work, along with the date that you plan to go back and confirmation that your salary will be the same.
2) Returning to work part-time
If you plan to return to work part-time after having children, this will usually mean a drop in income which may affect the amount you’ll be able to borrow. Bear in mind though that some lenders will allow you to borrow up to four or five times your income and up to three and a half times your joint income if you’re taking out a mortgage with someone else. This is the same for home mortgages as well. Others, however, will offer lower income multiples. Again, it’s worth speaking to L&C to find out which lenders may be able to help you based on your individual circumstances.
3) Being self-employed
Self-employed parents can find it tricky to get a mortgage if they’ve only recently decided to go it alone. That’s because lenders will usually want to see accounts for the last two to three years, although some will consider only one year’s proof of earnings.
If you need more help when it comes to mortgages and loans for self-employed, using a loan payment calculator can help you to determine your eligibility before you apply. Just because you don’t have a predictable income, it doesn’t mean you should avoid applying for loans or mortgages. You just need to make sure you are confident in your ability to repay what you owe on time and have proof your company is able to turn a profit each month and generate a steady income for you.
Lenders will generally accept SA302s self-assessment tax calculations and a tax overview as proof of your income. Alternatively, a lender might ask your accountant to certify your income. This sounds tricky but L&C can help you with the paperwork requirements and find a lender who understands your circumstances.
4) The impact of childcare costs
When you submit a mortgage application you’ll need to include documents detailing your outgoings, including any childcare costs. Childcare costs are likely to have an impact on the amount you’ll be able to borrow. The good news is certain lenders are less restrictive and L&C know which ones may be prepared to take a more flexible approach.
5) Do lenders take tax credits into account?
Lenders will usually take child tax credits, child benefit and working tax credits into account when assessing whether you’ll be able to afford a mortgage. Some lenders impose restrictions on the amount of income from benefits they’re prepared to consider.
London and Country Mortgages can help find the right mortgage or remortgage deal for you, take care of the paperwork with a dedicated case manager and best of all, they won’t charge you for the service. Find out more here here.