Refinancing

Yes this is acceptable to a few lenders as an exception to normal policy. Please note that due to new legislation that was introduced on the 1/1/2011 some lenders are being cautious to any policy exceptions where the customer cannot prove that they can afford the loan with their current income.

If you are borrowing >80% of the property value then you are unlikely to be approved.

The policy from one of our lenders for maternity leave mortgages is as follows:

Process: 

• applicants payslips (from the last 3 months prior to commencing parental leave)
• letter from employer confirming employment and salary
• letter from employer stating the terms of the parental leave, particularly the return date and the employment tenure upon return (FT, PT or casual)

Credit decision

• how long to they have before they return to work?
• do they have liquid reserves to fall back on?  Do they have any cash to fall back on if they are unable to service in absense of the female's income?  
• does the SP allow for child care costs
• does the SP include DSS payments which may cease upon their return to work
• have they included expenses for the new child

Upon considering all of the above, if acceptable the lender can take up to 100% of the income.

By the way there is a template for a  returning from maternity leave employment letter here. Just scroll down the page for the wording for maternity leave. Generally you will need to provide a little more evidence than just a letter, primarily showing your income from when you were working to backup the letter itself.