Pension for Mortgage Term

redviking

I am writing this on behalf of my sister who has given me permission to ask away


My sister is looking at getting another mortgage and renting her property out, she has a deposit etc


Issue is, with her partners salary and her combined of approx £40pa, they are unable to get the mortgage amount they want on affordability (loan credit card), they can afford the repayments


As my sister has no pension until February (auto enrolment) the lender will not increase the offer, until a pension is in place


Question is, is it worth her taking out a private pension until February and then asking her employer to pay into her private one? Or is it best to just delay it until auto enrolment in February?. They are looking at securing a mortgage as soon as possible, but lender will want evidence of pension, not just a letter from employer stating when enrolment will happen.


Hope this makes sense


Thanks

dunstonh

Question is, is it worth her taking out a private pension until February and then asking her employer to pay into her private one?

It is unlikely that most employers would be willing to do that as it would not meet auto-enrolment criteria.

but lender will want evidence of pension, not just a letter from employer stating when enrolment will happen.

The lenders normally need confirmation of what the income from that pension is likely to be using approved projections (typically the mid rate projection). So, the contribution levels are going to need to be high enough to achieve the required level.

redviking

Thanks for the reply


Her employer has told her that her auto enrolment will start in February, but the lender have asked for some confirmation of that.


Her employer has said he nothing in writing, which I find strange

dunstonh

Her employer has said he nothing in writing, which I find strange

The November 2017 auto-enrolment dates are getting their paperwork at the moment from the pensions regulator. So, her employer should have had something months ago. They would need to go through an duties checker and should really be at the point where they confirm what they are doing and whom with by now.