When you're on maternity leave, your financial situation can feel uncertain. While it’s possible to get credit, the bigger question is whether you should borrow during this time. Let's explore your options.
If you're considering borrowing while on maternity leave, it's important to take a moment and assess your financial needs. Maternity pay is often lower than your usual salary, which can make it more challenging to manage debt repayments.
Here’s a quick breakdown of Statutory Maternity Pay (SMP) in the UK:
For the first 6 weeks, you receive 90% of your average weekly earnings (before tax).
For the next 33 weeks, you receive either £184.03 per week or 90% of your weekly earnings – whichever is lower.
After that, your employer isn’t required to pay you anything for the remainder of your maternity leave (up to 13 weeks).
So, with reduced income, it's important to ask yourself if borrowing now is the best choice. If you're taking out credit to cover daily expenses, will you be able to handle the repayments once you return to work? Remember to factor in any potential childcare costs.
Lenders largely base their decision on your income. They’ll use your income, outgoings and other factors to calculate how much you can comfortably repay each month.
Here’s what you need to know:
Lenders can’t ask if you’re on maternity leave. However, they will ask for your current income. If you’re on Statutory Maternity Pay (SMP), this is what you need to declare, not your full pre-maternity wage.
Lenders might hesitate to approve your application if your current income is much lower than usual. This is because they may doubt your ability to keep up with repayments.
If you’re returning to work soon, it might be worth waiting to apply for credit. Here’s why:
You’ll have a higher income, which could increase your credit limits.
You could also benefit from better interest rates by waiting.
You could improve your chances of approval.
Before borrowing, consider some alternatives to ease financial pressure:
Budgeting and expense tracking: Take a close look at your current spending to see where you can cut back while on leave.
Government benefits: Check if you qualify for benefits such as Universal Credit or Child Benefit.
Speak to lenders: If you’re already in debt and struggling to keep up, talk to your lenders. They may be able to offer a payment holiday or reduced payments while you're on maternity leave. Bear in mind that missed payments and reduced payment plans can affect your credit score.
It’s essential to weigh up your current financial situation and ability to repay before making any decisions. If you can wait until you’re back at work and your income increases, you may have more borrowing options and access to better deals.
Disclaimer: We make every effort to ensure that content is correct at the time of publication. Please note that information published on this website does not constitute financial advice, and we aren’t responsible for the content of any external sites.
Fiona is a personal finance writer with over 7 years’ experience writing for a broad range of industries before joining Ocean in 2021. She uses her wealth of experience to turn the overwhelming aspects of finance into articles that are easy to understand.
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