Mortgage affordability calculations

patchyX2

When applying for a mortgage, is it possible to get a lender to consider where you'll be able to reduce your outgoings? Or is it always a case of "You've been spending it for the last X months, so we're going to assume you're going to continue spending it".

Reason for asking is that our mortgage is tiny at the moment, so we have upped our pension contributions and are saving more into our ISA's. When we move, then we'd likely being taking on a big mortgage and greatly reduce our contributions to ensure that our monthly disposable income remains approximately the same.

I appreciate that the simplest solution is to just reduce our contributions now, so when they ask for X months of bank statement (is 3 or 6 months standard?), it shows we can comfortably afford it. But we might not end up moving for a year or two, so we don't want to miss out on the contributions/growth during that time.

amnblog

Voluntary pension contributions and saving do not affect affordabiltly

patchyX2

amnblog said:

Voluntary pension contributions and saving do not affect affordabiltly

Ah, that's good to know. So how is affordabiltly calculated? You provide payslips to prove income, then they review bank statements for outgoings, but exclude certain spends (e.g. Pensions, savings)?

booksandbikes

I'm in a similar situation - Does it make a difference if pension contributions are via salary sacrifice? Payslips show pre- and post- salary sacrifice amounts, if that makes any difference.

kingstreet

If a lender's affordability calculator requests pension contributions, enter them. If it doesn't, don't. If pension contributions aren't requested, it's moot if they come out of gross or net income. IIRC only Santander asks for that level of detail.