Is It More Difficult Then Ever For Women To Get A Mortgage?
With the housing market more difficult than ever for buyers, are women being discriminated against by mortgage providers? A new survey from uSwitch.com has revealed shocking news about applying for a mortgage as a pregnant woman - and a trend for women lying about their plans to start a family in order to get on the property ladder.
1 in 10 female home buyers claim they have faced mortgage discrimination, while nearly a quarter of women who have applied for a mortgage have intentionally hidden family plans from lenders, according to the survey of 2000 women aged 25-35 polled by uSwitch.
The comparison site conducted the research in response to a number of enquiries the Financial Ombudsman Service (FOS) received from women who felt their mortgage applications were being rejected because they were due to go on maternity leave. We investigate to see what this news means for women.
Why Is It So Tough?
After the Mortgage Market Review in April last year, stricter mortgage eligibility criteria means that lenders may refuse to grant a mortgage if they believe an applicant is unable to meet the repayments due to an 'expected' drop in income. Which means that for many women, plans to go on maternity leave or starting a family become problematic when trying to buy a home, with lenders making women feel uncomfortable in interviews and asking intrusive questions about their plans to start a family. So much so, that women are either putting off having children, or hiding their family plans through the application process.
Are Women 'Hiding' Pregnancies?
Donna, 30, Southampton told us she decided to hide her plans to get pregnant again because she'd applied for a mortgage on maternity leave before and found it incredibly difficult, despite being able to prove that she'd return to work and had enough money to keep up repayments: "Three years ago I re-mortgaged through a broker whilst on maternity leave. I was told I’d have very limited mortgage options with less competitive rates, even though I was planning on returning to work. The mortgage lender repeatedly questioned me on this and I was finally asked for a letter from my employer to prove I’d be going back to my job and the salary I’d be on."
Being asked so many questions, Donna felt that "the broker didn’t trust me to manage my own finances. My husband and I had the savings and means to pay the mortgage even if I was on maternity leave, but this wasn’t taken into consideration, which felt very unfair."
So she decided to hide her second pregnancy: "When I recently applied for a mortgage I was pregnant with my second child, but my husband and I decided not to reveal this" she said. "Throughout the application process the mortgage broker repeatedly asked us whether we had any plans that would impact my finances. Although I was never asked outright about my pregnancy, it felt underlying which naturally made me feel uncomfortable"
Even if you're not expecting to start a family any time soon, women can still be subjected to intrusive questions. Bridie Cox, 27, revealed when she re-mortgaged her London home the questions from providers put a lot of pressure on her and her partner. “After submitting our application form we had a two hour phone call with the mortgage provider. While on the call we were asked a lot of intrusive questions, for example when exactly we would be starting a family and even whether we were currently trying to conceive. It was really uncomfortable and we both felt like we were being asked questions which seemed to put us under unnecessary pressure. We thought our chances of being accepted for the mortgage hung on whether or not we wanted to start a family.”
Of course, mortgage providers have a job to do - to make sure that you can make your monthly payments before they lend you the money. But if a couple have made the adequate savings and planned for a baby by saving, should they be subjected to such questioning, and should women be put under such extreme pressure when applying? 48% of those surveyed said they had saved up to cover their mortgage and other bills before going on maternity leave, and 79% thought lenders needed to take savings into consideration.
How To Get A Mortgage If You're Starting A Family
So what's the solution? Delay having a child to secure your dream home? Or hide your plans from the mortgage providers?
Tashema Jackson, money expert at uSwitch.com, argues that hiding your plans from mortgage providers is a risky - and stressful - business.
"Lying about your financial situation is a very risky business which could lead to your mortgage lender invalidating your offer. It could also make things very stressful - our research found that 71% of women who concealed their family plans from lenders experienced high levels of stress and anxiety during the mortgage application process" she said.
But Tashema does argue that women need to be aware of what providers can and can't ask - no blanket assumptions should be made about your circumstances, but you do need to explain how you intend to keep up repayments if you're intending to start a family:
"Remember that lenders’ mortgage decisions must be based on a thorough assessment of your circumstances, not a blanket assumption. This means that if you’re asked about your plans to start a family, you must also be given the opportunity to explain how you plan to manage any associated drop in income - for example by using savings. They key is to make sure that you can share your plan with a lender."
"No provider should discriminate against women. The best approach is to shortlist mortgage providers based on those that offer the best deal for you. As you then go through the application process, be alert to inappropriate or intrusive lines of questioning"
And what can women do if they feel like they are being discriminated against? Make a formal complaint.
"If you declare that you have no plans to start a family, but feel a lender has made an unfair assumption and rejected your application, then you should make a formal complaint" Tashema says, first to the lender and then to the Financial Ombudsman Service."While lenders have a responsibility to ensure people only borrow what they can afford, that doesn’t mean that starting a family should automatically stop you from getting the best mortgage deal."