Mortgage application, payslips, and tempory high pension contributions

hugheskevi

The position of my wife and I:

• Own current property without a mortgage, worth about £575,000
• Planning to purchase next property before March 2025 and sell current property separately to avoid chain complications, but transactions will be at similar times, probably selling our current property within at most 3 months after buying the new property (I am aware this will create an additional £33K Stamp Duty charge which I will reclaim when our current place is sold)
• I have a joint agreement in principle with Yorkshire Building Society for up to £647,000
• I plan to take out an offset mortgage to purchase the new property, and will largely or wholly offset the mortgage once our current property is sold

I don't have a specific property to purchase yet, but the purchase details will be something like:

• Purchase price of new place=£675,000
• Deposit=£135,000 (20%)
• Mortgage=£540,000 (80%)

If necessary I could raise a much higher deposit (up to a maximum of £500,000), but would have to use ISAs to do so, which I do not wish to do unless essential. 

My concern is that my wife and I have just significantly increased our pension contributions to ensure we contribute all of our higher rate income tax into a pension, and we are now contributing about 80% of salary into our pensions for the remainder of 2024/25. I am contributing through relief-at-source, my wife is contributing via net pay, and neither of us is using salary sacrifice.

The pension contributions mean our gross income on payslips is unaffected, but our net income will be very low due to the high pension contributions. I hope that lenders would not see this as an issue as the very high pension contributions are voluntary and temporary, but can anyone confirm whether this could be an issue?

We have payslips up to and including October 2024 where we have only been contributing low (under 8%) percentages of salary into workplace pensions and so have normal gross and net income. From November 2024 onwards payslips will show the higher pension contributions and lower net income. We will revert to low pension contributions from April 2025 onwards, but that should be after we have purchased our next property.

Thanks in advance.

Brie

I would have thought that with that sort of purchase price the lender will be taking a actual look at the application rather than it being stuffed into a computer to decide.  In which case the high pension contributions can be explained.  Ultimately with those numbers you don't look that high risk so I suspect you won't have too many problems.  

hugheskevi

Brie said:

I would have thought that with that sort of purchase price the lender will be taking a actual look at the application rather than it being stuffed into a computer to decide.  In which case the high pension contributions can be explained.  Ultimately with those numbers you don't look that high risk so I suspect you won't have too many problems.  

Thanks, that is what I am thinking too - but hopefully if I can find somewhere quickly it could be a moot point and the most recent payslips wouldn't have the higher pension contributions anyway.