Two years after helping our clients’ Stephen and Hannah buy their first home, Hannah is about to commence maternity leave to welcome their first child. Hannah is planning to take 12 months leave and then return to work four days a week, as opposed to full time. With their fixed interest mortgage period coming to an end, it was time to talk to Steve again.
During maternity leave, in most instances, there is an option for the employee to take annual leave and maternity leave, either at full pay or half pay, followed by any government funding. In most cases there will be a gap between income sources stopping and the return to work date.
With this in mind the family needed to ask:
- Is maternity leave going to be a barrier to continuing their loan?
- Is their current lender the best option?
- Will refinancing be possible with a change in family income?
Due to our responsible lending mandate, Venro needed to verify how they were going to meet their repayments while there is no or reduced income from one party. We needed to ensure the loan wouldn’t be placing Stephen and Hannah in financial hardship. Equally Venro have a responsibility, from a best interest duty perspective, to find a solution that is in their clients’ best interest.
Most banks price favourably for new business over the retention of customers, so Steve looked for options. With over 50 lenders to compare, Venro were able to tap into lenders who have a specific maternity leave policy. Steve had assessed what resources his clients had, to bridge the gap before returning to work.
Steve was able to find four lenders to compare in the unique maternity policy space. The criterion of the policy was that a lender must hold cash to mitigate the shortfall whilst meeting the mortgage plus living expenses calculation, as well as hold a verified employment return to work letter.
The bank we identified didn’t have an annual fee like their current lender and would also provide a $4000 refinance cash back. They also had an interest rate differential of almost 40 points. The result was a fantastic year one benefit of $5000 and an ongoing saving of almost $2000 per annum.
For a family expecting a baby and changing their earning arrangements, this saving was massive! Whilst they had a reasonable loan to start with, Stephen and Hannah’s story proves it is absolutely worth working with a broker who can fine tune lending arrangements to meet your circumstances.
“We are so glad we got in touch with Steve when we started getting serious about buying a home. The whole mortgage process seemed very daunting but Steve made the process so easy and sat down with us to explain all our options. We felt like we were given the best possible choices for our personal situation. We have since recommended Steve’s services to friends and family and they have also spoken very highly of his work.”
Stephen & Hannah