Paying into pension >>> impact salary/affordability?

Diesel3390

Hi all, 

Needed a bit of guidance and some heads cleverer than me to think things through. 

My income falls into the 45% additional rate, so I'm not only losing personal allowance (in the 100k-125k range), but I'm also paying 45% on some of my earnings.

Obvious thing would be to put money into Pensions in order to get tax relief, but key question is: DO I LOSE AFFORDABILITY when applying for remortgages?

For example, if I reduce my effective take home pay to below 100k, will the banks see me as earning less, or do they tend to acknowledge that actually I have more income and simply just paying into the pension.

Just don't want to be in for a nasty shock when I try to remortgage. 

Is each lender different in how they treat this or is there a general market standard?

Thanks all. 

jimjames

I think it depends how it's done. If salary sacrifice then it might impact borrowing as it reduces your headline salary

MWT

Diesel3390 said:

For example, if I reduce my effective take home pay to below 100k, will the banks see me as earning less, or do they tend to acknowledge that actually I have more income and simply just paying into the pension.

Just don't want to be in for a nasty shock when I try to remortgage. 

They are less likely to care if this is a voluntary additional contribution to your pension which you can change at will, it is less about the 'effective take home pay' than it is about the the declared gross salary on your payslips.

Are you employed and receiving a salary from a company that you do not have significant ownership in, or is this a situation that will be treated as being 'self-employed' due to material ownership of the entity paying you?

Diesel3390

Hi, no all of the income is basically employment salary.
I want to put money into a pension, but just don't want to be told by a lender that I cant afford the mortgage because i pay too much into a pension

MWT

Diesel3390 said:

Hi, no all of the income is basically employment salary.
I want to put money into a pension, but just don't want to be told by a lender that I cant afford the mortgage because i pay too much into a pension

Best approach is to talk to a broker of course as they will know the attitude of the different lenders, but as long as the additional contributions to your pension are discretionary, a broker should be able to help you find a lender that is not just going to look at the net effect of what you have been doing regarding the pension.

Diesel3390

MWT said:

Diesel3390 said:

Hi, no all of the income is basically employment salary.
I want to put money into a pension, but just don't want to be told by a lender that I cant afford the mortgage because i pay too much into a pension

Best approach is to talk to a broker of course as they will know the attitude of the different lenders, but as long as the additional contributions to your pension are discretionary, a broker should be able to help you find a lender that is not just going to look at the net effect of what you have been doing regarding the pension.

Thanks that makes sense