Preparing financially
Buying while on or planning parental leave
How a temporary income reduction affects borrowing capacity, and why timing your application matters.
- A planned income reduction, including parental leave, generally needs to be disclosed to a lender even before it starts.
- Some lenders assess your income at application time; others may consider a documented return-to-work plan — policies differ meaningfully.
- Applying for pre-approval before leave begins can be simpler for some lenders, but pre-approvals expire.
Applying before, during or after leave
A planned or current reduction in income — parental leave being the most common case — is something lenders generally need to know about and factor into a serviceability assessment, even if your income will return to its previous level afterward. Some lenders assess based on your income at the time of application (which may be reduced or nil during leave); others may consider a documented return-to-work plan and pre-leave income. Policies differ meaningfully here.
Timing your application
Applying for pre-approval before leave begins, while your income is at its usual level, can be more straightforward for some lenders — but pre-approvals expire (see the pre-approval guide), so timing your actual purchase against that expiry matters. If a purchase will happen during leave, be upfront with your lender or broker early rather than partway through the application.
Practical checklist
Before applying around parental leave
- Disclose any planned leave to your lender or broker early in the process
- Ask specifically how the lender assesses income during and after leave
- Check your pre-approval's expiry against your expected leave and purchase timeline
Questions for a professional
- How will you assess my application if my income is reduced during leave?
- Would a documented return-to-work plan change your assessment?