Halifax Building Society Stockport

Don't let a baby stop you getting on housing ladder

Family move: Mark Adamczyk and Joanna Nugent with Pixie Sophia

Teaching has helped us into a new family home

The personal touch and a bit of hard bargaining helped physical education teachers Mark Adamczyk and Joanna Nugent get the home they wanted – just in time for the arrival of their first baby Pixie Sophia last year.

Mark and Joanna met while working in secondary schools in Wolverhampton and Stockport respectively.

They found a place to buy in Stoke-on-Trent, Staffordshire, a town that suited both their commutes, and had an offer accepted on a three-bedroom semi-detached home.

The pair had applied for a mortgage with Teachers Building Society when Joanna realised she was pregnant.

‘It was a big shock when we found out that the mortgage had to be reassessed on the basis of Joanna’s maternity pay, ’ says Mark, 26.

Fortunately Teachers – which lends to those in Dorset and Hampshire as well as to education workers countrywide – does not assess applications by computer.

An extra discount on the purchase price negotiated with developer Taylor Wimpey made the sums add up.

‘Being able to go back to the same person with all our questions made the process much easier, ’ says 26-year-old Joanna.

The changes are due as a result of the controversial Mortgage Market Review being brought in by regulator the Financial Conduct Authority.

‘This has been worked out with the best of intentions, but until it beds down it could bring a lot of unintended consequences, ’ says one leading mortgage broker.

Continuing confusion over how to treat maternity pay for mortgage or re-mortgage applicants is adding to the uncertainty for new and prospective parents. And while the long-term intention of the changes is to ensure that everyone has a mortgage they can truly afford, the best advice is to be ready for a difficult transition period this spring.

Here are four ways to overcome the challenges and get a family-friendly mortgage right now.

Get the right mortgage before you start a family

The biggest mortgages and the best rates are likely to go to two-wage households with low outgoings. And the best way to have sound financial foundations for your family is to have a long-term, low-rate mortgage that you will not have to change for at least five years.

Even if you have got just 20 per cent equity or less you can get a five-year fix from the likes of West Bromwich Building Society from 3.39 per cent. Other deals include the Post Office from 3.34 per cent and Yorkshire Bank from 3.69 per cent.

It is also worth considering flexible mortgages that let you overpay your debt in good times and then pay back a little less when money is tight.

Using lenders that allow you to take the occasional payment holiday can also make sense – though payment breaks will increase the total you will ultimately repay on your mortgage. Consider deals from Halifax, HSBC, Nationwide Building Society and Tesco for some of the more flexible terms.

Go to a local lender during maternity leave

Every lender is expected to re-examine its application process as the end of April deadline for the new Financial Conduct Authority rules comes in.

Mass market national names are likely to use even more computer-driven scoring systems with little leeway on whether applicants are accepted or rejected. Smaller local lenders should continue to examine applications personally – and to offer extra flexibility to many customers.

Local building societies take the latter approach, as do some new but small lenders such as Metro Bank.

Stick to your current lender if your finances have changed

Trying to switch your lender in search of a better deal is set to get a lot more expensive this spring, with experts predicting a host of new, non-refundable application fees as lenders try to pass on the cost of the extra checks they have to carry out on prospective customers.

If you are worried that your application will be refused because your household income has fallen – or your outgoings have risen – since you started a family, then these fees are not worth paying.

Lenders should always offer a range of new fixes, discounts or trackers to switch to when borrowers’ deals end and as you can normally move on to these without paying fees or supplying any paperwork it can prove a good option when time and money are tight.

Keep your outgoings low

Lenders are delving increasingly deeply into prospective borrowers’ finances when they assess loan applications. They deduct a host of regular expenses – from childcare costs to sports memberships – from after-tax pay to see how big a mortgage an applicant can afford.

If you can apply for a new mortgage while your parents are providing free childcare you will stand a better chance of getting a big loan. And as lenders can examine bank statements you will not be able to hide payments for professional childcare.

It can also pay to use a low or no fee broker such as London & Country Mortgages in Bath to ensure yours is presented properly and goes to the most sympathetic lender.

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