Will a future pay rise allow me to get a higher mortgage offer?

24
Found 1st Aug 2012
Hi,

Hubby has been promoted at work and will receive a nice pay increase (approx. 25% more) starting from January. We are currently trying to sell our house and have seen one or two properties we really like. Trouble is, on his current salary we wouldn't be able to raise the mortgage we needed, but we'd be fine if a mortgage lender used his new salary. I have contacted two mortgage brokers to ask if we could borrow now against the future salary increase. Hubby's boss (company's UK MD) said he would provide my husband with a letter confirming his new pay structure etc. Hubby has worked for this company for 5 years and it is a straight forward promotion (no conditions, re-location etc). The first mortgage broker I contacted said mortgage lenders would only release funds based on new salary after January (but might start the application before), the second broker said he couldn't see it would be a problem and he was confident he could find a mortgage broker willing to release funds before January.
Looking online, I can't get any the wiser either. Have read about someone in the same position receiving his mortgage before his new salary increase, but that was back in 2008... I would imagine since things are tighter now they might be more reluctant to do this now?
Has anyone on here been in this predicament? If so, what was the outcome? Would love to have an idea if we can offer on a property now or if we'd have to wait until January...
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24 Comments
possibly, but you supply your last three pay slips so he can't prove he's got his pay rise till he's had three months of it maybe?

wait what, just seen January NEXT YEAR? lol think you're having laugh. No don't make an offer on a house till you've got a confirmed offer, that's just being a right **** getting someone's hopes up like that.
Edited by: "lumoruk" 1st Aug 2012
you will need a letter from employer as proof but should be fine

cant see how you think you'd get better advice from misc than the two mortgage brokers
Edited by: "csiman" 1st Aug 2012
Most lenders ask for 3 months payslips so you will have to wait I would think. The only exception is if you were to self certify but I'm not sure how easy that is now. I did this in 2007 and all I needed was a letter headed document confirming my salary!! I needed a larger deposit however and like I say I would imagine lenders are stricter now.
Oh there you go I guess that covers it all!
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deleted193256
no, they base it on current earning, not future earnings
csiman

you will need a letter from employer as proof but should be finecant see … you will need a letter from employer as proof but should be finecant see how you think you'd get better advice from misc than the two mortgage brokers



But the two brokers I contacted had different opinions...one saying 'Yes, no problem, I can find someone who can release the funds before Jan.' while the other broker said it wouldn't be do-able, we'd have to wait until Jan. to have funds released. Hence my confusion, and why I was hoping someone on here has been in a similar position.
BTW, our deposit would be around 40% - I doubt this would make a difference though
I think it would be very high risk for a mortgage company to do this and I wouldn't want to be one of their customers if they did allow it. I could print of a letter on headed paper, this is the era of photo shopping after all. We're all experts at it. I done it at work when they asked me to print off my pay slips, I left a note with it say what's the point of this I can just edit my earnings in paint.

They gave access for the managers after that to everyone's pay on the intranet.
Edited by: "lumoruk" 1st Aug 2012
BEANZ-ON-TOAST

But the two brokers I contacted had different opinions...one saying 'Yes, … But the two brokers I contacted had different opinions...one saying 'Yes, no problem, I can find someone who can release the funds before Jan.' while the other broker said it wouldn't be do-able, we'd have to wait until Jan. to have funds released. Hence my confusion, and why I was hoping someone on here has been in a similar position.


I see what you mean now. You might be able to get a bridging loan for the short period before Jan and then pay it off by re-mortgaging in Jan.

I would see a mortgage advisor directly in a branch (Nationwide..) rather than a broker to see what hey can offer.

Contact us

To discuss your mortgage requirements with us, please call:
0800 111 4410

nationwide.co.uk/mor…htm
BEANZ-ON-TOAST

BTW, our deposit would be around 40% - I doubt this would make a … BTW, our deposit would be around 40% - I doubt this would make a difference though


that makes a huge difference as the lender's risk is basically eliminated
Edited by: "csiman" 1st Aug 2012
csiman

that makes a huge difference as the lender's risk is basically eliminated



But I was told they it's all about affordability now, responsible lending and all that. For example, if I were to put down a 90% deposit on a £1,000,000 property but my annual salary was only 10k, I couldn't afford the repayments on that small mortgage.
BEANZ-ON-TOAST

But I was told they it's all about affordability now, responsible lending … But I was told they it's all about affordability now, responsible lending and all that. For example, if I were to put down a 90% deposit on a £1,000,000 property but my annual salary was only 10k, I couldn't afford the repayments on that small mortgage.


I dont think the OP's circumstances are quite so dramatic.......
whats the latest calculation to work out how much you can borrow
splatsplatsplat

whats the latest calculation to work out how much you can borrow


Mortgage broker said x 4.9 (absolute maximum) if you have a good credit rating

My input is that if there is a lender prepared to do it they are going to be few and far between thus restricting the mortgage that you could have access to, i.e rates and fees.



csiman

[I would see a mortgage advisor directly in a branch (Nationwide..) … [I would see a mortgage advisor directly in a branch (Nationwide..) rather than a broker to see what hey can offer.



Good plan, restrict yourself to the offering of one lender?
Riptide

My input is that if there is a lender prepared to do it they are going to … My input is that if there is a lender prepared to do it they are going to be few and far between thus restricting the mortgage that you could have access to, i.e rates and fees.Good plan, restrict yourself to the offering of one lender?


not at all - just get professional advice straight from the horses mouth rather than a generic broker who in my experience dont have much of a clue when it comes to fine detail.
BEANZ-ON-TOAST

Mortgage broker said x 4.9 (absolute maximum) if you have a good credit … Mortgage broker said x 4.9 (absolute maximum) if you have a good credit rating


I would be stunned if you could get x4.9 as the norm is x3 single income.

x4.9 could be asking for a hole heap of trouble if interest rates start going up
40% deposit though csiman so I wouldn't worry too much.
Sounds like you're going to be stretching it with a bigger mortgage OP. Stay within your means.
gbspurs

40% deposit though csiman so I wouldn't worry too much.


but that is irrelevant to being able to make repayments. If you had say a £100,000 mortgage with a gross salary of £20,000; then you would be paying about 75% of your net income in mortgage payments alone if interest rates hit 10% (unlikely in the short term but quite feasible over the long term).

This is why so many people lost their homes in the 90's when interest rates hit 15%
csiman

but that is irrelevant to being able to make repayments. If you had say a … but that is irrelevant to being able to make repayments. If you had say a £100,000 mortgage with a gross salary of £20,000; then you would be paying about 75% of your net income in mortgage payments alone if interest rates hit 10% (unlikely in the short term but quite feasible over the long term). This is why so many people lost their homes in the 90's when interest rates hit 15%



I'd be very surprised if they hit 1% let alone 10%, (I want them to hit 10%! as I owe nuffink)
splatsplatsplat

I'd be very surprised if they hit 1% let alone 10%, (I want them to hit … I'd be very surprised if they hit 1% let alone 10%, (I want them to hit 10%! as I owe nuffink)


cant recall the last time I saw a 1% mortgage

think the best is around 4-5% now so only need a 4-5% base rate rise to see a 10%+ mortgage (average base rate is around 6-7% over the last 25 years)

bankofengland.co.uk/boe…asp
master_chief

Sounds like you're going to be stretching it with a bigger mortgage OP. … Sounds like you're going to be stretching it with a bigger mortgage OP. Stay within your means.



I would be staying within our means. We have other regular income (guaranteed for next 10 years) which mortgage lenders sadly won't take into account. So no worries about us over stretching.

Anyway, have now contacted some other mortgage brokers who have all said the same. Basically the answer is YES. BUT...formal application cannot be made too far in advance, must be within 3 months of pay rise. Letter of employer stating new salary is sufficient. So good news.
BEANZ-ON-TOAST

I would be staying within our means. We have other regular income … I would be staying within our means. We have other regular income (guaranteed for next 10 years) which mortgage lenders sadly won't take into account. So no worries about us over stretching. Anyway, have now contacted some other mortgage brokers who have all said the same. Basically the answer is YES. BUT...formal application cannot be made too far in advance, must be within 3 months of pay rise. Letter of employer stating new salary is sufficient. So good news.


but you dont have control of interest rates

basically, divide your future loan by 10% and decide whether this is within your means as an annual interest repayment (plus endowment payment & bills of course)

Edited by: "csiman" 1st Aug 2012
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