The pregnancy mortgage penalty: how getting knocked up can knock down the amount you can borrow

Expectant mothers could unwittingly reduce the amount they can borrow for a home by revealing their pregnancy to their bank.

Mortgage lenders are required to apply rigorous affordability tests to every borrower, which includes asking whether a customer expects their income to vary in future.

However, banks do not ask about family plans, meaning that those early in their pregnancy could be needlessly limiting the amount they can borrow by making such a disclosure.  

Customers who reveal their pregnancy may be assessed as if they had a dependant already, which could significantly reduce the size of the mortgage offer.

A couple with a household income of £35,000 and no outgoings could potentially borrow up to £157,000.

Adding £500 childcare costs per month would reduce that to £112,000 – or just £44,000 for £1,000 a month.

The lender will further penalise customers who expect their income to drop, such as those who plan to take extended maternity leave. 

David Hollingworth of L&C, a mortgage broker, said: “If there is to be a reduction in hours and income, the lender would take that into account.”

He said that although childcare costs were factored into the affordability assessment, some lenders would reduce the penalty if family members planned to assist with some of the childcare. 

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