Applying for a home loan can be daunting at the best of times.
But when you throw pregnancy and parental leave into the mix, getting the credit you want can seem even more out of reach.
That was the case with ABC journalist Ashlynne McGhee – who recently had her pre-approval revoked when the bank found out she was on maternity leave.
So, here’s the rundown of what your rights are and what can help you get approved.
First of all – can I get a home loan during pregnancy or parental leave?
Yes, but it could be more difficult.
Pregnancy or maternity leave does not prevent a customer from getting a loan, according to a spokesman for the Australian Banking Association.
But the lender might classify you as high risk, says Natasha McGrow, a lawyer with Women’s Legal Service Queensland.
“Most banks will flatly reject your loan application because of the risk of not going back to your previous job, having another child, or because they can only estimate your current income,” she says.
But there are some lenders that you can still borrow from (if you meet certain requirements).
But there are some lenders you can still borrow from (if you meet certain requirements), so it’s worth checking out.
“Lenders differ in the way they assess maternity leave and other entitlements, so one bank may not classify your loan as eligible, but another might,” says Alexandra Kelly of the Financial Rights Legal Centre.
So is it easier if I hide my belly?
Not necessarily – but it’s complicated.
Legally, the bank cannot ask you if you are pregnant as this could be seen as discrimination.
And there are no boxes to tick on your application that say, “I’m pregnant!”
Some women have told the ABC they hid their stomachs to make sure they got the credit they wanted.
“I think it’s okay to be discreet, but intentional deception of any kind is best avoided,” says Ms. McGrow.
Not being honest when your bank asks you if you are aware of current or future changes in your financial situation could hurt you later.
If you don’t tell the bank you’re going on vacation or your income is going down, you may not be able to argue that the bank misjudged your loan application if the loan becomes unaffordable, Ms Kelly says.
“Providing false or misleading information on a loan application can have serious consequences, such as: B. a legal penalty,” she adds.
And it could also put your family in financial distress when your baby comes if you can’t afford to pay the mortgage.
If you’re thinking of getting pregnant, start saving now
In addition to a solid deposit, it’s also good to have a savings buffer to prove to the bank that you can make your repayments, says Rachel Farrell, a mortgage broker at Bloom Capital.
“It’s important to have the parental leave repayment difference in savings because every lender will ask for it,” she says.
“You should consider whether you can afford short-term income repayments and allow for additional living expenses that you never paid for before — including childcare.”
And while it’s not always possible, given the choice, you may want to apply for a loan before you become pregnant or when you return to work.
“It’s always best to try to buy property before you start a family,” says Ms. Farrell.
“In this way, you will not encounter any hurdles during parental leave and can maximize your purchasing power.”
Of course, don’t get a huge loan that you can’t afford if your income drops.
You should make sure that you can afford to service this loan later when you start a family.
Is there anything I can do to improve my chances of admission?
Yes. Lenders require proof of your employment and income (usually several months’ worth of pay stubs).
Some require a budget detailing your living expenses.
Don’t forget to include any sources of income (such as paid parental leave from your employer or government benefits).
Finally, something as simple as a letter from your employer can really help your case, Ms. Farrell says.
Be sure to include your usual income, whether you are returning full-time, part-time, or part-time, and your return date.
If you need further help: ASIC’s Moneysmart website has useful information and tools:
And if you need help with budgeting, speak to a toll-free, confidential financial advisor: 1800 007 007