Buying a home and expecting a baby - it’s hard to think of two bigger life-changing events.
If you’re expecting a baby and you’re also planning to take your next step on the property ladder, you need to know what to expect. This blog helps you prepare.
Too much stress?
The first question to ask yourself is whether buying a home while pregnant is too much to take on. Pregnancy is an exciting time, but can also be quite draining.
One of the most stressful things about buying a home is how long it can take. Once you put an offer in, there’s no guarantee you’ll have moved in by the date you want.
If your baby’s due date is only a few months away, you may not have completed the sale by the time you give birth. And even if you’re at the beginning of your pregnancy, your sale may get held up.
In the worst case, the sale may fall through altogether, perhaps because a survey uncovers issues you weren’t aware of or your chain collapses. You will then have to decide whether to stay put or start the whole process again with a new house – and you’ll already be further through your pregnancy.
Taking the plunge
After thinking everything through carefully, you may decide that you want to go ahead with buying a new home. You may be keen to get more space for your growing family, or perhaps to move nearer to friends, relatives or schools.
If you decide to go ahead and buy, you’ll need to apply for a mortgage. There are a few things to be aware of when you’re pregnant and applying for a mortgage, so let’s go through them now:
The lender can’t ask – Lenders do not have the right to ask you either whether you’re pregnant or you’re on maternity leave when you apply.
But you can still tell them – While you’re under no obligation to tell a lender you’re expecting, we recommend you do. The fact is, extending your family can have a dramatic effect on your household finances, as can going on maternity leave, and lenders need to know about changes like this. Which brings us to:
What can you afford? – Lenders need to know that they’re lending you what you can comfortably afford to pay back. If you borrow too much and struggle with the repayments, your home is at risk of repossession, which could leave your family without a roof over your heads. It’s mortgage affordability that your pregnancy can have an effect on when you apply to a lender.
How pregnancy can affect mortgage affordability
Mortgage affordability is exactly what it sounds like – how much you can pay towards your mortgage once all your other regular outgoings come out of your current income. This includes everything from utility bills to gym membership.
If you’re pregnant and not working when you apply for a mortgage, the amount you can afford to borrow based on your household income is unlikely to change too much with the arrival of your baby. However, if you’re working and about to go on maternity leave, your income will almost certainly change.
Moving from a full-time job to statutory maternity leave can have a significant effect on your family’s finances. If the mortgage payments you apply for are based on what you can afford on your current full-time income, will you be able to keep up with this once you leave work?
"Being up-front with your lender means you won’t have to worry about how you’ll afford your mortgage when you finish work."
By being up-front with your lender and basing your affordability checks on your income during maternity leave, you won’t have to worry about how you’ll afford your mortgage when you finish work. And having one less thing to worry about when your baby arrives is a real must!
You can work out what your repayments could be on the mortgage you want using a mortgage repayment calculator like ours. This can help you calculate how much you can afford to borrow.
Got a mortgage and preparing to move? Find out what to expect here and here.
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Intelligent Lending Ltd (Credit Broker). Capital One is the exclusive lender.