Q I have a question based on the article you wrote in 2015. I am a deputy head teacher. My partner and I are having strong arguments over me stopping my pension, which I want to do so that I can get the best possible mortgage by providing three payslips clear of pension contributions. We are looking to increase the size of our house in north London as we have a young family. My partner doesn’t have a pension as she thinks they are the devil. She is freelance and so her payslips won’t be contributing to the mortgage process. It appears most mortgage firms do not overlook your pension payments. What should I do? MW
A To repeat what I said in May 2015, I most certainly wouldn’t advise anyone to cancel their pension contributions for a few months to boost their chances of getting a mortgage. Besides, there may be no point as a significant number of lenders don’t ask about pension contributions. In addition, lenders ignore pension contributions deducted from salary – as I assume yours are – because they are already taken into account in the net pay figure on payslips, which areused to assess affordability. In addition, stopping contributions won’t bump up the net pay figure by as much as you think because your tax bill goes up.
Rather than stopping pension contributions, you should concentrate on reducing what you owe on other loans, including credit card debts. Also, if your partner fills in a tax return every year – which she should if she doesn’t pay tax through the PAYE (pay as you earn) system – she can provide evidence of income to a prospective mortgage lender in the form of HM Revenue and Customs tax-assessment forms. So it doesn’t make sense to exclude her from the mortgage process as her income could increase the amount you can borrow.
Finally, I’ll repeat what I said about using a mortgage adviser if you think your pension contributions are going to be a deal-breaker since an adviser can point you in the direction of a lender that will not take them into account.