Plans to buy a family home or renovate often get put on hold when a new baby arrives and the household incomes take a hit. But a small policy change by one of Australia’s largest banks could mean big things for families bursting at the seams.
Westpac has crunched the numbers and realised, when it comes to lending money, women on parental leave and those with solid plans to return to work are a pretty safe bet.
Westpac’s director of Women’s Markets Ainslie van Onselen tells Babyology parental leave and return to work income will now be recognised when home loan applications are considered.
She says this could greatly increase the amount families, in all their forms, can borrow to buy a suitable home or build necessary extensions right when they need the space to grow.
For example, Ainslie says, a couple, where a man earns the average income of $82,000 a year and a woman is on parental leave for up to 12 months, could previously only borrow up to $230,000 because only his earnings were taken into account.
Now, taking the woman’s parental leave payments – government or employee paid – into consideration and her return to work income of say $40,000 per year if she returns to work three days a week, the amount they can borrow jumps to $615,000.
“It’s about recognising the fact that about 67 per cent of women of working age now work and earn an income,” Ms van Onselen says.
“What we are trying to do is recognise times have changed, more women are in the work force and more women are returning to work after having children.”
The mum of two says she looked at the bank’s own employees first and found 95 per cent of parents came back to work after having children.
“My chief executive officer asked me to see what policies and procedures we have in place that are pain points for women,” Ainslie says.
“It was by talking to some of the mums at work and our female customers and in our focus groups, that we realised there was this kind of outdated procedure in place that we needed to obviously change.”
It can be an uphill battle for mums when they return to work. Babyology recently reported how after tax and childcare payments some mums can be left earning as little as $5 a day.