Tips for borrowers planning to start a family

Having a baby is one of the most wonderful experiences in life, but it can also be stressful.

You don’t want to be worrying about how you’re going to juggle your finances once your baby arrives. The time to start planning is when you decide to become, or find out that you’re going to be, a parent.

Plan early and seek advice
While many couples juggle mortgage repayments with bringing up a baby on a single income, a little planning goes a long way to help new parents ease the financial load. There are a few options on offer by lenders, but as well as seeking advice from your mortgage broker, talking to friends and family about their experiences is also a good place to start.

Make extra loan repayments
Consider payment honeymoons – or holidays – which are available to some borrowers depending on the type of loan you have. For those who do have that option, access generally depends on the amount of prepaid funds you’ve accrued. For example, if you’ve been paying extra into your loan for a while and now have $20,000 in your redraw facility, it’s these funds that will cover your payment holiday.  But, once these funds have been used up, the payment honeymoon is over.

Take advantage of government assistance and all leave types
Get to know all government family assistance payments that are available to you and take advantage of all types of leave offered by your employer, such as holiday, maternity and long-service leave. Making decisions about how you’ll use the leave means you can put a plan in place early.

Consider switching to interest-only repayments
While some people may be able to switch to interest-only repayments, it’s important to remember that lenders still expect the loan to be paid out in (usually) 30 years. So if you’re not paying any principal for a while, this will impact on your minimum repayments when you revert back to principal and interest.

Think about whether to fix or not
Things that might affect your decision include the length of time you’ll be on one income, the income amount, and whether or not you have ongoing additional expenses, such as a car loan – but be cautious, consider your personal circumstances before making a decision.