Voluntary temporary salary reduction - will that scupper a mortgage application?

BlondBoy

Wonder if any brokers (or anyone!) may be able to advise...

I voluntarily agreed to waive salary and live off savings for 3 months to help the business I'm working for through a Covid bump. Now I've seen a property that I'm quite interested in, but will have 0.00 on payslips for April, May and June. 

How would a lender view this, do you think? Have I scuppered myself mortgage-wise for a few months?

dimbo61

Well 41 views and no replies so far so I will stick my head above the parapet and say No income No mortgage.
So you need the last 3 months pay slips to prove how much you earn.
They also ask how much you earn each year.
April, May June ( nothing ) so this may effect your application.
However we now live in strange times and if you have a good deposit and secure employment the Computer may say YES.

Vestraun

dimbo61 said:

Well 41 views and no replies so far so I will stick my head above the parapet and say No income No mortgage.
So you need the last 3 months pay slips to prove how much you earn.
They also ask how much you earn each year.
April, May June ( nothing ) so this may effect your application.
However we now live in strange times and if you have a good deposit and secure employment the Computer may say YES.

Having to take no salary so the company survives does not sound like secure employment. 

kuratowski

Vestraun said:
Having to take no salary so the company survives does not sound like secure employment. 

In normal times, I might go along with you, but in these peculiar times - when the government has literally ordered businesses to shut down - I wouldn't be so quick to judge.

kingstreet

Lenders are taking the reduced income where there have been furloughs and paycuts. In the circumstances where there is no income, I suspect you will need to wait to return to work/pay or look for a lender willing to accept a letter from employer confirming the temporary nature of the arrangement.

Thrugelmir

Why wasn't your employer able to furlough you? 

BlondBoy

Thanks all - appreciated. 

dimbo61 said:

Well 41 views and no replies so far so I will stick my head above the parapet and say No income No mortgage.
So you need the last 3 months pay slips to prove how much you earn.
They also ask how much you earn each year.
April, May June ( nothing ) so this may effect your application.
However we now live in strange times and if you have a good deposit and secure employment the Computer may say YES.

Makes sense. Got a deposit of around 20%, so not disastrous, but not stellar either, wouldn't have thought.

Vestraun said:

Having to take no salary so the company survives does not sound like secure employment. 

It's a youngish company with a lot of potential, but circumstances meant revenue dropped to nil. More an issue of cashflow than long-term viability. But take your point about how it sounds.

kingstreet said:

Lenders are taking the reduced income where there have been furloughs and paycuts. In the circumstances where there is no income, I suspect you will need to wait to return to work/pay or look for a lender willing to accept a letter from employer confirming the temporary nature of the arrangement.

Very helpful - thanks. I can provide employer documentation that's it's temporary and voluntary. Sounds like odds are no better than 50/50 (if that). Wouldn't be the end of the world to leave it for a few months - was tentatively wondering if it's even worth a try.

Thrugelmir said:

Why wasn't your employer able to furlough you? 

They could have done, but a number of us wanted to keep working. As above, it's a youngish company with lots of potential and there was plenty for us to do to improve chances of bouncing back quickly. I, and a few others, decided to do that rather than sit it out on furlough (as admirable as that scheme is).