Following the introduction of new affordability rules, new parents are being asked to prove that they are returning to work before their income is taken into account.
The Observer surveyed 15 of the biggest lenders and discovered that parents on maternity leave or shared parental leave were asked for proof that they intended to return to work within three months of the application being made. Metro Bank, Virgin Money and Skipton Building Society all say that if the parents aren’t returning to employment within three months, their income will be disregarded when assessing affordability.
Other lenders will base a decision on the income that the applicants expect to receive rather than while they are on maternity or parental leave. Some lenders, including the Halifax and Coventry, will ask how you will meet the payments for a mortgage while you are on leave. According to a recent survey conducted by uSwitch, 10% of women said that they believed they had suffered discrimination by lenders, due to the fact they may plan to start a family.
The Financial Conduct Authority is currently conducting research to determine whether lenders are rejecting mortgage applicants unfairly since the new affordability rules were introduced in 2014. According to the director of Maternity Action, Ros Bragg, a woman may have grounds for claiming pregnancy discrimination if a lender presumes a woman is unable to repay a mortgage due to being pregnant.
It is important that all borrowers make sure they can afford their mortgage, whatever their circumstances. A mortgage adviser who has invested in CeMAP training will have the required knowledge to help people obtain a suitable mortgage.