Transcript of Video Blog:
Hey, everyone. Rowan Smith with The Mortgage Centre, here today to talk about maternity leave and mortgages, because this is a big thing that comes up. People oftentimes end up going on maternity leave and then realizing the house is too small. They go to qualify for their mortgage and the bank tells them, “Sorry, you can’t qualify. You can’t afford it.” And they go, “But I’ve got a job I’m going back to, where I’m going to make $100,000 a year.” And they say, “Well, you might go back.”
Statistically, a very large percentage of women that take maternity leave don’t go back. So the bank has to hedge its bets. It has to look at, “Can you afford this now, with your reduced income? Can you afford it if you don’t have that income?” Most times, people come to me with maternity-leave questions, and there’s six months or three months left, and they’ve realized, “I’ve got to get into a bigger place. I’ve had my second or third child,” or whatever the case is. And, “I need more space.” The husband’s income maybe doesn’t qualify a loan, so the wife comes and starts the application process. Very common problem. They’re told no at most institutions.
Now, I have lenders that will treat maternity leave a little more favorably. If you’re going back to a decent job, and you’ve got a letter from your employer confirming that the position awaits you and the salary awaits you, we can generally use it. We can typically get around it if you’re otherwise strong clients with clean credit and if the income otherwise makes sense. If you’ve just gone on mat leave, and you’ve got a full year ahead of you, it’s a little harder, because that’s an extended period of time where you’re going to be forced to make payments that you would qualify with on your normal income on the EI or the government-subsidized maternity-leave portion.
Now, some companies are very good. Some companies actually offer women a top-up. So if you’re only going to get 60 percent of your income throughout the year when you’re on maternity leave… The companies, these are good employers, will pay a top-up to bring you back up to 100 percent of what you’d be earning. In those circumstances, we can definitely use it. But again, certain banks have just hard-and-fast policies where, “If you’re on mat leave, we can’t help you, ” and it doesn’t go much further than that in the discussion.
Well, I can help you. If you’re on maternity leave and you’re looking to find out if you can get a mortgage, yes, please give me a call. It’s Rowan Smith from The Mortgage Centre.