The Question
We are due to remortgage in March next year but I’m also pregnant and will be on maternity leave when our current deal ends. The baby is due in January, and I’ll get six weeks on full pay then I’ll receive statutory pay.
How will this affect our remortgage and is it worth taking out a mortgage earlier?
Darren’s Answer
Firstly, congratulations on your upcoming arrival! When looking to remortgage, you have two main options:
OPTION 1: Complete a ‘Product Transfer’ with your current lender
This is where your lender will have a suite of products (often known as ‘Switcher’ deals) that you can take advantage of. These will be variable, tracker and fixed rate options.
The benefit of this is that there is no application as such, simply a new deal applied to your mortgage. No additional documents or credit scoring would be required, and nor would there be a need for an affordability assessment as the lender already assumes the risk.
OPTION 2: Remortgage to a new lender
This is a more in-depth process as it will require a full application, where you would need to provide documentation such as bank statements, payslips and ID. You may also incur legal or valuation fees, but a broker can source lenders who will cover this cost for you. This also involves an affordability assessment, which I will outline further below.
Although this can seem like a dauting process, a broker can guide you through this and ensure you receive the best deal.
Often staying with your current lender can be more seamless but might not be the cheapest deal.
Factoring in maternity income
When looking at affordability and your maternity income, the good news is that with most lenders, for the purposes of assessing affordability, the overall lending assessment will be based on the ‘return to work’ income details.
This means your period of maternity should not impact your ability to remortgage to a new lender. You will need to factor in that there will be increased childcare costs/outgoings when you return to work and what impact this will have on your salary.
Both options have their advantages, but these things can be difficult to navigate. I would strongly advise speaking to a whole of market mortgage broker who can provide the best rates for your circumstances.
Meet our expert…
Darren Polson is head of mortgage operations at Aberdein Considine. He has been writing a regular column for What Mortgage for over two years and is now here to answer YOUR questions.
If you have a question for Darren please email kate.saines@emap.com or leave a message in the comments below.
