A larger home can become more appealing at the same time your household income is about to change. If one borrower runs a business and the other plans parental leave, the application needs to explain more than last year's earnings.
Start with a timeline. Show what income arrives during leave, what changes when work resumes and how the household will cover the months in between. That is more useful than assuming the lender will use either your lowest month or your old combined salary forever.
Put dates against the income
Write down the intended settlement date, leave start date, end of paid leave and expected return to work. Beside each period, record the income you can substantiate and the expenses you expect.
A return at three days a week is different from a return to the old full-time role. Childcare, travel and business costs may also change. Make those assumptions visible before deciding what repayments the household can comfortably carry.
For the self-employed borrower, consider what happens to the work itself. Will the business continue with staff, will the owner reduce hours, or will trading pause? Last year's result can explain the history. It cannot, by itself, explain a planned change to next month's work.
Our guide to variable business income helps organise the trading picture. Use records your accountant can support and disclose material changes, rather than assuming the business will absorb every disruption without cost.
A lender discussion with a purpose
Westpac is one lender worth investigating for this timing issue. Its current having-a-baby page links to a parental-leave checklist that separately describes Parental Leave Home Lending for new or existing lending. That section recognises paid leave and return-to-work income, with eligibility dependent on the loan product.
The linked checklist calls for an employer letter confirming the return date, hours or employment basis, and income. The form also contains a self-employed note about a work interruption and repayments resuming. Ask Westpac which requirements apply to a new purchase and to each borrower's income.
That makes Westpac a useful place to ask a specific question: which loan, if any, can assess this household's documented leave and return plan? An employer letter for one borrower does not establish acceptance of the other borrower's business income. Both parts still need to be resolved together.
The checklist is an older document still linked by Westpac's current page. Have the lender confirm the current evidence requirements and treatment of your scenario before relying on it for a purchase. It is a starting point for assessment, not an approval.
Leave cover is a separate decision
Do not confuse a lender's options to reduce existing mortgage repayments with its rules for approving a new loan. A payment reduction can also mean higher repayments later. It does not prove that a larger purchase is affordable.
For your own planning, test the whole leave period before using savings as deposit. Suppose, purely as an example, household spending and repayments exceed documented income by $2,000 a month for five months. That creates a $10,000 gap before unexpected expenses. The money covering that gap cannot also be the money you use at settlement.
Then test a later return or lower hours. You do not need to predict every outcome. You do need to know whether a modest change would leave the household without room to manage.
Apply with a timeline, not an assumption
Prepare the leave arrangements, employment confirmation, available business financials, current commitments and the household cash plan. Our accountant information request can help organise the business records without asking the accountant to promise a lending outcome.
Ask Flexdoc to identify which income the proposed lender could assess during leave and after the return, what evidence remains outstanding and how much cash should remain after settlement. If you already hold a self-employed pre-approval, tell the broker about changed leave or work plans before relying on it.
The aim is a home that works through the change in family life. A borrowing figure is useful only when you understand the income and timing on which it depends.