Managing Your Mortgage While on Parental Leave. ??

Embarking on the journey of parenthood is a transformative experience, and when it intersects with homeownership and managing a mortgage, the financial implications can be significant.

In this week's update we will look at some practical ways to manage your mortgage repayments and stay on top of your financial obligations while on parental leave so let's dive in!

Budgeting for Baby

Before the stork arrives, recalibrate your budget to account for baby-related expenses and a reduction in income. Use a budget calculator to forecast your income and outgoings, incorporating costs like nappies, formula, and childcare.

Do a “practice run” on one income for a few months in the lead up to the baby's arrival to see if you can maintain your current lifestyle and utilise any savings to top things up when the real production begins.

Exploring Government Assistance & Your Employers Policy

Investigate government programs like the Best Start Payment, Paid Parental Leave and Working for Families. The ASB Support Finder tool can be a valuable resource in determining your eligibility for such benefits. Also check with your employer regarding their parental leave policy so you can plan ahead.

Flexible Repayment Plans

Early conversations with your Mortgage Adviser can reveal various options to ease your financial burden during parental leave.

These may include reducing your mortgage repayments if you were paying a higher amount to begin with, or restructuring to an interest-only loan for a little while. Each lender will have specific policies, so it's important to discuss your individual situation and get approved early so you know what you’re up for.?

One lender actually offers a parental leave mortgage repayment reduction for existing customers, potentially cutting repayments by up to 50% for up to 12 months. This is designed to help you free up cash to cover some of the costs of your new arrival. Strict criteria applies and it's subject to bank approval so it's best to have a chat with your Mortgage Adviser to see if this is an option for you.

What If You Need To Refinance While On Maternity Leave??

Tailoring your mortgage to your new financial situation might involve refinancing or adjusting terms to better suit your needs during this time.

Different lenders have varying policies when it comes to lending to individuals on maternity/paternity leave, so it's essential to find a lender who understands your unique circumstances and is willing to work with you. This is where having a Mortgage Adviser by your side really helps, so you can understand the lender's policies regarding parental leave.??

One of the key factors lenders consider when assessing a mortgage application from individuals on parental leave is the likelihood of returning to work. If you can provide evidence that you intend to return to your job after your leave and have a signed letter from your employer outlining your return date, working hours, and pay rate, it can strengthen your application.

They will also want assurance that you have a plan in place to cover your mortgage repayments during your parental leave. It's important to demonstrate financial stability and the ability to meet your obligations. If you have savings that can be used to cover repayments, provide documentation to support this.

Additionally, if you are eligible for any government benefits or entitlements, such as Working for Families or Best Start payments, provide proof of these to the lender.?

Lenders will also consider your long-term financial plans and how they align with your mortgage application. It's beneficial to demonstrate that you have considered the costs of raising a child and have factored them into your budget. Providing an estimate for childcare services or a letter from a family member who will be providing childcare-like services can further strengthen your application.?

By taking these proactive steps, you'll be better prepared to manage your mortgage while enjoying the precious moments of early parenthood. Remember, thorough preparation and understanding your financial options can make all the difference in this exciting chapter of your life.? Feel free to reach out if you need a hand!

Cheers,

Vicki?

??021 190 3930

[email protected]

The opinions expressed in this article should not be taken as financial advice, or a recommendation of any financial product. Vicki Kemp or Vega shall not be liable or responsible for any information, omissions, or errors present. I recommend seeking professional legal and/or mortgage advice for your own personal situation. My Disclosure Statement is available on request.