Up until now, home loans haven’t exactly favoured families.
It’s strange, given that a growing family usually means you’re about to outgrow your current living arrangements. (But when has common sense ever dictated anything?)
Now, legally, lenders have never been able to obviously discriminate against expectant, new or growing families. But – and it’s a big but – borrowing potential is assessed on guaranteed income and whether you’ll be able to stick to your repayments without significant hardship.
Given that, in most cases, people rely on two incomes (you and your partner) when applying for a home loan, lenders are inclined to believe that a change in financial circumstances – such as parental leave (of which the paid part is usually only for 18 weeks) and reduced income if you head back to work part-time – will lead to significant hardship.
So what’s the solution?
In the past, it has meant some women have “hidden” a pregnancy when applying for a home loan. It may sound far-fetched and even a little crazy, but do a quick survey of friends, colleagues and extended family – chances are you’ll find someone who’s had to resort to it.
Luckily, that’s all set to change.
In June, the Westpac Group (which includes St. George, BankSA, Bank of Melbourne and RAMS, too) made a landmark decision that will have a hugely positive impact on families and future families.
The bank now recognises paid parental leave and return to work income in regards to your borrowing potential.
Ultimately, it’s evened the playing field, allowing both new and existing customers who are preparing to grow their families to do so smoothly and with increased flexibility when, let’s face it, you need it most.
It may sound simple and straightforward, but it’s still ground-breaking territory. So what prompted it?
The people it, appears.
Recent home lending research from Westpac shows that 88% of Aussies believe banks should “look beyond” parental leave and other short-term situations when weighing up an individual’s borrowing potential. On top of that, eight out of 10 people feel that a person’s future income should be taken into account if they’re on parental leave. Seems fair, right?
Westpac agree, so they set the wheels in motion to make both situations a reality.
Of course, it’s a smart move for a bank that prides itself on being the country’s first major bank to have a female customer, teller and CEO.
Ainslie van Onselen, Westpac’s Director of Women’s Markets says, “We have a long and proud history of supporting women and families to achieve their financial goals.”
And with one less stress to worry about, those financial goals – and that happy, family home – suddenly seem a whole lot more achievable.