Question for mortgage advisers re salary

JayZed

I may be moving house and applying for a new mortgage towards the end of the year, and I have a slightly unusual salary situation - I'm wondering how it might affect the amount I'm able to borrow. Apologies for long post, but it takes a bit of explaining.

I work for a company which is asking all employees to volunteer for temporary amendments to our terms of employment which would allow reductions in our working time by up to 20% at any point over the next 18 months (this has been much reported in the media and discussed on these boards, so you can probably work out who I'm talking about).

I am planning to volunteer for this option, though I work in a part of the business that's unlikely to be affected, so I think it's relatively unlikely that the option will be implemented in my case - though of course I can't be sure of this.

We've been told that if we volunteer and the company is asked to provide confirmation of salary to a mortgage lender during this period, it will state our full salary, and note that we have a temporary change to our terms that allows them to reduce our hours/salary by up to 20% for a limited period (at any time up to Sep 2010).

My question: what effect do you think this is likely to have on the amount that I'm able to borrow, based on salary multiples? I realise that it may well vary from lender to lender and that I can only get a definite answer when I apply for a mortgage (which wouldn't be before this autumn), but I would appreciate any thoughts/opinions/educated guesses that you might have.

ILW

Anything could happen between now and Autumn.

JayZed

*bump bump*

housesitter

Well obviously it's going to affect it isn't it.
They'll treat it as you actual salary becasue taht's what you have coming in. Be it actual or potential.

If after 18months it goes back to normal, in their eyes you got a raise and can still pay the mortgage so they don't care.

JayZed

Just to clarify, my question is about a situation in which, at the time of applying for the mortgage, I'm still on my regular salary, but the lender is made aware of the potential for a temporary drop in income, which might or might not actually happen.

Robert_Sterling_3

I put myself in the place of the Building Society and think about what I would do.

I would lend to you on the basis that only 80% of your salary was likely to be paid in the future.

This may not be what you would like to hear.

herbiesjp

This would have to be a scenario where your adviser would have to discuss with the lender and see what they would be happy to accept, if they went for a reference to your employer

However it a lender bases the mortgage on your payslips, then they can only go on that figure

koexelek

Robert_Sterling wrote: »

I put myself in the place of the Building Society and think about what I would do.

I would lend to you on the basis that only 80% of your salary was likely to be paid in the future.

This may not be what you would like to hear.

I tend to agree. The criteria of all lenders is getting harsher by the day. It seems they always take the most negative scenario these days

silvercar

Why would you want to borrow an amount that could leave you struggling to afford the repayments?