Main Menu
Main Menu
Advias_Yellow_RGB_HR

do pension contributions affect mortgage affordability

do pension contributions affect mortgage affordability
Can paying into your pension affect your ability to raise a mortgage? We all have our financial goals. Usually, the greatest ambition for a young professional will be obtaining their first home, and pension contributions may be an afterthought.

the 60% tax trap

Since the government introduced auto-enrolment in 2012 attitudes have shifted. There still needs to be more education on the subject, such as the 60% tax trap for earners of £100,000 and £125,140.

The dilemma is, do you increase pension contributions to save tax or invest the minimum so that you can raise a larger mortgage? £25,000 will equate to circa £100k of mortgage borrowing, which could be the difference between buying the perfect home.

How do mortgage lenders assess mortgage contributions?

Many mortgage lenders are understanding and can ignore pension contributions from affordability calculations. This is positive as it ensures that borrowers can take full advantage of paying into their pension without impacting their home ownership dreams.

So take advantage of your pension allowances, especially for younger borrowers where compound interest will have the greatest effect. 

Book a call
Trustpilot

Share this post with your Network

Salisbury House,

London Wall,

London,

EC2M 5SQ

info@advias.co.uk

+44(0)207 082 5777

Twitter Linkedin

Services

Premier Mortgages

Development Finance

Bridging Finance

Large Mortgages

About

Home

About

Careers

Contact

Legal

Complaints

Privacy policy

Terms of Business

Cookie Policy

Marketing & Disclaimers Policy​

Advias Ltd provides independent mortgage advice and  is Authorised and Regulated by the Financial Conduct Authority and is entered on the Financial Services Register (https://register.fca.org.uk/s/) under reference 982478 The FCA do not regulate some forms of Business Buy to Let Mortgages and Commercial Mortgages to Limited Companies. The information contained within this website is subject on the UK regulatory regime and is therefore targeted at consumers based in the UK. Your property may be repossessed if you do not keep up repayments on your mortgage. A fee will be payable for arranging your mortgage. Your consultant will confirm the amount before you choose to proceed, but this is typically 0.25% of the mortgage balance, e.g. £2,500 for a mortgage of £1,000,000. Advias Ltd Registered Address: Unit 1 The Cam Centre, Wilbury Way, Hitchin, Hertfordshire, United Kingdom, SG4 0TW Registered in England and Wales No: 13206156. We are a credit broker and not a lender. Once we have assessed your needs, we will recommend a lender(s) that provides suitable products to meet your personal circumstances and requirements, though you are not obliged to take our advice or recommendation. Whichever lender we introduce you to, we will typically receive commission from them after completion of the transaction. The amount of commission we receive will normally be a fixed percentage of the amount you borrow from the lender. Commission paid to us may vary in amount depending on the lender and product. The lenders we work with pay commission at different rates. However, the amount of commission that we receive from a lender does not have an effect on the amount that you pay to that lender under your credit agreement.
Copyright © 2023 Advias