Can You Refinance While on Parental Leave?
Yes. Parental leave is temporary and lenders know it. Policies differ widely, though. Some lenders assess only what you are earning right now, which may be little or nothing. Others will assess the income you will return to, as long as it is documented and you can show how the loan is paid in the meantime.
How Do Lenders Assess Income During Parental Leave?
| Approach | What it means |
|---|---|
| Return-to-work income | Lender uses your confirmed salary on return, commonly where the return is within 12 months |
| Current income only | Lender uses employer and government parental leave pay as received, which is usually much lower |
| Partner income only | The application is assessed on the other borrower, with the loan needing to service on one income |
| Part-time return | Lender uses the reduced hours and pay stated in the employer letter |
These are general patterns across the lending market, not rules. Each lender sets its own policy and changes it without notice, which is the practical reason to have the scenario checked against 50+ lenders before applying.
What Is a Return-to-Work Letter?
It is a letter from your employer on company letterhead confirming:
- That you are on approved parental leave and your role is being held.
- Your expected return date.
- Whether you return full-time or part-time, and the hours.
- Your salary on return.
Lenders that accept return-to-work income also want to see how repayments are covered during the gap, usually through savings, paid leave still to come, or your partner's income.
If you are pregnant or planning leave and your loan needs a review, do it now while you are on full pay. The application is assessed on your current income and settles before leave begins. You are still expected to be able to afford the loan through the leave period, so we plan for that honestly. If you are already on leave, it is still workable with the right lender and a clear employer letter.
Should You Refinance Before, During or After Leave?
- Before: the widest choice of lenders and the simplest assessment. Suits anyone whose rate is uncompetitive or whose fixed term ends during the leave period.
- During: fewer lenders, more paperwork, but often worthwhile if the saving is significant or you need to restructure.
- After: full choice returns once you are back at work and have a payslip, though some lenders want a short period back first.
What If You Cannot Refinance Right Now?
A reprice with your current lender needs no income assessment and can lower repayments while household income is reduced. See repricing vs refinancing. If repayments are a strain, speak to your lender early about hardship options, which are available under the National Credit Code. Buying, as distinct from refinancing, while on leave is covered in home loans and parental leave, and the general process in refinancing on a PAYG salary.
General information only. It does not take your objectives, financial situation or needs into account. All lending is subject to lender assessment and approval. Fees and figures are typical ranges at 14 November 2026 and can change. Lend & Loan, Australian Credit Licence 511092.
