How to pause your mortgage payments during pregnancy
Life has a habit of throwing up financial challenges - some are planned, such as maternity leave or a career break; others are unexpected, such as an accident or illness.
Whatever the reason, you can ask your lender to hit pause on your mortgage repayments, or reduce the amount you pay for an agreed period, usually between three months and a year.
While the more common reasons are usually big "life" events such as maternity leave, you can still ask for a pause for more frivolous adventures such as extended travel, provided you have a reasonable plan to catch up once you are back at work.
Around 40% of lenders in the RateCity database advertise repayment holidays or pregnancy pauses.
However, even lenders who don't promote this feature are likely to consider it on a case-by-case basis.
Pregnancy pauses can come in a range of shapes and sizes, depending on the lender and your personal circumstances.
Some lenders will let you move to interest-only payments, while others will let you let you take a short break from making payments altogether.
While there is no one-size-fits-all format, there are a raft of common conditions you should keep an eye out for:
- You often need to be at least 12 months into your loan and have a reasonable track record in meeting your mortgage repayments on time.
- Lenders may want you to have a loan to value ratio (LVR) of 90% or less, which means you need to own at least 10% of your home. Be wary of this condition in a falling housing market. While you may have started out with an acceptable deposit, your LVR might have slipped backwards due to falling property prices, even if you've been paying down your debt.
- Some lenders will only let you take a repayment holiday if you are ahead on your home loan, and will require you to dip into these funds.
- Lastly, if you do pause your repayments, your lender will want to know how you plan to get back on track. Ideally, they will want evidence you have a job to return to when your pregnancy pause finishes.