The Parent Trap: Keeping Your Home Loan Under Control While on Parental Leave

This post was originally published at unohomeloans.com.au

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Building a new home is a dream for many you Australian families. However, when working parents take time off as their families grow, financial obligations such as home loan repayments can become daunting. uno Home Loans can assist families in this situation find the best options for their situation. By implementing some of the following tips the stress of repaying home loans while taking paternity leave can be alleviated:

Family planning:

Tim Bowcock from unohomeloans.com says home loan borrowers can avoid the anxiety associated with this situation by planning ahead. Understanding the cycle of life which a couple is in can aid in reducing future financial struggle. Bowcock suggests that this can be done by:

• Building a safety margin into your budget in order to access extra funds to cover unexpected costs.
• Look into flexible and less common interest rate types. This can either result in a level or certainty in repayments expected in the future or allowing for ‘repayment holidays’. These loan schemes will grant a repayment holiday for an extended period of time, while parents are off on paternity leave.
• Linking a bank account to a home loan account can offset the interest on your home loan and potentially save you thousands and years off your home loan.
• Paying off more than your minimum repayment before taking parental leave can allow you greater flexibility when on paternity leave with the right provider.
• Using a split interest- rate loan (partly fixed and partly variable) allows you to have the benefit of repaying your loan faster, while still managing interest rate variability.

Lender’s role:

Early planning extends to dealing with your lender or potential lender. Bowcock suggests that there are solutions available to those with a home loan or who are looking for a home loan if they act early. He suggests that:

• Families apply for a home loan as early as possible, ideally while both parents still have an income.
• When circumstances are changing it is best to speak to your lender as soon as possible.
• Families talk openly and provide documentation to verify their story as there are typically alternative ways to deal with repayments during parental leave.

Taking parental leave is a time to focus on your family. Keeping your repayments under control with these tips will allow you to spend more time with your loved ones, rather than focusing on your finances. uno can provide customers with various options to navigate this time.

Additionally, if you head over to the parental leave calculator on the ASIC’s moneysmart site, you can see how much income you will have available during this time. The site also has a handy budget planner.