Getting loan while pregnant

Hi

Share your experience of getting a loan while pregnant.

Husband and I have decent government jobs with ok pay. We also have about half the equity in our land worth about 400k.

I phoned the building society yesterday and she said they will halve whatever my planned maternity pay is if I tell them I'm pregnant, which apparently I'm obligated to if they ask me about planned leave".

She said this happens EVEN if I am planning to take my leave at half pay (ie if I'm taking it at half pay they will halve it again and only use 25% of my income). I can't see how this can be correct!

She also included a dependent although as far as I can tell the application only asks about current dependents.

I didn't apply just asked the question. Maybe I'm better going with a less conservative big ugly 4 (currently with one of them) until I have my leave and go back to work?

At time of applying will be on full time wage no dependents. It's bothering me as I know we can service the loan and I earn around same as my husband, a little bit more and we nees them
To consider at least half my pay.

Its not exactly what your asking but I was on maternity leave when we applied for our house loan. I was getting the paid parental leave payments and told them when its finished i will be going back to work. I had to get a letter from my employer saying how many hours i would approx work and what my hourly rate was.

Thanks that sounds like a more realistic approach, may I ask who you borrowed with? I like the service and rates from credit unions but know they are generally more conservative. Might need to go with the greedy bank until I go back to work!

We went through rams but the loan is with westpac

Thank you. Happy for any other input of people's experiences, too.

Hi Leksie,
Definitely there are a range of policies across lenders, and you're right, the credit unions tend to be more conservative, even with valuations - assuming you are borrowing less than 80% (you said you have lots of equity in the land) you should be able to qualify with a letter confirming your return to work date and actual wage.

That's all providing you are comfortable with the repayments & certain you're going back to work - things change, keep that in mind! I'm a mum, I know I didn't want to go back straight away.

I think you might even be pleasantly surprised by service and pricing with a bank these days, they've come a long way - although I still prefer the second tier to the "big 4".

Good luck with your build - find a good broker to compare lenders for you & see who you'll fit with best.

Bec

Thanks Bec and good advice. I guess I don't want to risk being declined and then trying to get a mortgage elsewhere. Discussing in person can help that.

I don't know what "lots" is but we have about half which I guess is good.

The credit union I spoke to told me that even if I choose to take my leave at half pay, they would STILL halve it (ie take only 25% of my wage) and this was also in line with their insurer if LMI is needed based on the valuation.

I know policies vary but I can't help but think that advice was incorrect - why would they only assess a quarter of your income when clearly you will never be in that position? I can understand halving your full wage if you are taking leave.

I know I will want to go back to work, if only part time. Funny question but how do the credit unions or other determine you will be about to start leave? She was a little vague about that. She said they may ask after pre-approval if there are any "changes in your circumstances".

I certainly don't remember anything like that being asked on our land loan with the bank. We just did the application and signed the papers. They had all our details as its our current institution (well there is a house to be demolished, and that is since I've been pregnant but of course I wasn't showing then!").

Perhaps we should go with the bank, we are in good standing with them already and then re-broker it once I go back to work? YIt will expediate the process in terms of demonstrating our financial position as everything is already there. We have a good rate with them at the moment. Maybe can negotiate for them to extend the introductory variable in line with what we can get elshwere. Your advice on a broker is good as well, for some reason I've always shied away from them for some reason.

See thats a really weird policy! They have to be responsible and somewhere someone has come up with that policy as responsibly anticipating your feelings about returning to work. They also have a weird policy around valuations, typically taking the valuer generals value from the land rates and adding the cost of the build - which we all know isn't right. Just tougher to get through.

I know I am biased but dealing with a broker allows them to sort through the policies and avoid you getting that "decline", as they know who will do what with your income, and, as it's a free service I don't understand why anyone wouldn't do it!

This even applies to going back to your current bank - we know what that bank will accept and if it will work, and often even get you a better deal there... we have contacts!

How far along are you? Building and a baby, clearly you don't scare easily!

Yeah that is right.. it made me wonder whether she was actually giving the right information or not.. I said exactly the same thing, by assuming 25% of my income you are actually assuming I won't go back to work.. and surely that can't be correct. It is difficult to find more detailed information online about their lending policies.

What are your tips for finding a *good* broker?

Hah.. well I am beginning to wonder!! As everyone keeps saying that.. I am 22 weeks now..

They said they are insured by Genworth and Genworth policy is the same as theirs.. I found this in the Genworth policy
100% accepted if length of employment criteria is met
"Note: Where a borrower is on maternity leave, 50% of paid income is acceptable. In cases
where the maternity leave pay period has ceased or where no maternity leave payment is
being received, no income allowance can be used."

"50% of Employer Maternity Leave Payment and government Paid Parental Leave
Payment (Working Parent Payment) is acceptable on the basis that this income is
currently being paid and will continue to be paid until the applicant returns to work
date as per confirmation letter from the employer."


So.. it doesn't count in the situation PRIOR to a person going on maternity leave, which is what the credit union had implied.

A literal interpretation would mean if I had chosen to take my mat leave AT half pay they would halve it again.. but that doesn't seem to make any common sense. Surely they would see the income had already been halved and it refers to half of your 100% income... that is what the second para implies, "employer maternity leave payment" being the 100% amount.

Well, my thought on that is it's not impossible she was right, it's also not impossible she was wrong, bank staff are under a lot of pressure to meet targets and are time poor & often are undertrained. Which building society was it? Heritage?

My advice re: finding a good broker is ask around, see who your friends have used and recommended, thats where I get pretty much all of my business from

Thanks and you are right. I know there won't be an issue servicing the loan, esp. as it is for construction and the full draw down is unlikely to be complete until shortly before I go back to work. We are not paying rent in the meantime. Do banks request verification of income at each draw down? I guess not but just curious. That could present an issue. My understanding is you are approved for the amount and then must provide invoices for draw down.