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Mortgage after pay rise

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Feb 6, 2023

Fact Checked By:
David Nicholson - Finance Editor

Mortgage after pay rise

It’s great to hear that your salary has increased due to a recent pay rise. However, if you have a mortgage application, this can create a problem. If you find yourself in this position, it is a good idea to seek professional mortgage advice, especially if your application for a loan is in progress or you are looking to borrow against your salary.

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Getting a mortgage after a salary increase

This guide will help you find a lender willing to give you a mortgage based on your income and it also explains how to wait until you have a pay raise before applying for a loan.

Click the link below to speak with our mortgage brokers. We can discuss your employment history and how to go about getting a mortgage with a higher salary than you originally had. We can also help if you are self-employed and we will assess your situation and introduce you to a mortgage provider most suitable to you.

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After a pay increase this is how to get a mortgage

Most lenders will allow you to borrow against your new income if you have confirmation from your employer confirming that you are getting a raise in your pay. They may ask for documentation from your employer to verify your salary rise.

However, some lenders are more strict than others, so depending on the lender you approach, you will need to be specific about whether your mortgage is based on your current salary or your pending wage rise.

Some mortgage companies will not allow customers who have a pending increase in their income to borrow until they are aware of it, whereas others won’t let you borrow against your increased income until you receive the increase.

Consult an expert for financial advice here today. Click the link below to begin your mortgage journey and discuss any questions you may have. The most common questions are “mortgage repayments”, “interest rates”, and “what do I need to do to be offered a mortgage”. This is why we are here to offer mortgage advice free of charge from an expert mortgage advisor.

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Your new salary can help increase your chances of getting mortgage approval.

Before you apply for a mortgage, it is a good idea to speak with a mortgage broker if you have just received a pay increase or have one in the works. It is not a good idea to go directly to a lender and find out how much you can borrow against your salary. This could result in you not being able to get the mortgage you want therefore if you approach multiple lenders to find one that is willing to accept your salary rise, your credit score could be affected.

A good mortgage broker will help you avoid this by matching you up with the right lender.

What should you do before applying?

If you can provide documentation from your employer to support a recent salary increase, some mortgage lenders may be willing to lend against your new salary. Some lenders will require at least one wage slip showing your higher income. You may also find lenders that insist on three months of wage slips.

A mortgage broker could help you save time. You might not need to delay your plans, since they can introduce you immediately to a lender who will accept pending pay increases.

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What happens if your payment is increased during a mortgage application process?

Things can get more complicated if you have already started your mortgage application and received confirmation of an incoming salary rise. Your deal will be based on your old wage or your new one. This depends on how far you have gone in the process and the lender’s policy on borrowing from people with recent increases in their wages.

If you have been offered an agreement of principle (AIP) based on your initial salary, it may be possible to negotiate with your lender and reach a deal that is based on the increased income. If your lender doesn’t recognise recent salary increases, you may be able to transfer your application to one who does.

You are more likely to lose any fees or charges that you have paid upfront the further you go in the process.

A mortgage broker can help you if you have not yet signed the binding mortgage offer but received a raise. They will help you to negotiate with your lender and determine if it is in your best interests to transfer your application to another lender to borrow against your salary.

How do you prove a pay increase to a mortgage lender?

Most mortgage lenders will accept a letter confirming your salary increase, the date it was due to kick in, and any other information. Some may also ask for a copy of your first wage slip, including your higher salary.

Some mortgage providers may require additional evidence to support your salary rise, such as:

  • The most recent contract for permanent employment
  • A letter advising of your salary
  • A letter requesting an annual income increase
  • Variation letter to previous salary terms (e.g. Increase in working hours)

Some lenders might also insist on the authenticity of confirmation letters.

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After a promotion, can you get a mortgage?

This can cause mortgage applications to be a little more complicated if your pay has increased because of a promotion at work. Some mortgage lenders will consider you when you start a new job. If your new position comes with a probationary period, this can reduce the number of available mortgage providers.

Although there are lenders that will accept applications in these circumstances, some will not. Others will, however, if they are satisfied with certain conditions, like…

  • Within three months of your application, your new job will start
  • At least 12 months of experience in the same industry
  • Do you have documentation to support your new job offer or salary increase?
  • With your new salary, you can include at least one wage slip
  • Some lenders may require you to wait 3-6 months before applying.

It’s possible to obtain a mortgage while you are in a new position or during a probationary period. However, you might encounter a lender who considers you a higher-risk borrower. You might be asked about your security of employment, which could lead to you having to defer your plans or agreeing to a higher rate.

Match with an expert mortgage broker today

Professional advice with a mortgage advisor is highly recommended if you are applying for a mortgage and have recently received or are awaiting a pay increase.

This can improve your chances of getting a mortgage against your new salary without any restrictions. A good mortgage broker regulated by the financial conduct authority will introduce you to the right lender and arrange the mortgage deal without you having to do anything.

A mortgage broker will relieve the stress of finding a mortgage deal to suit you.

Click the link below to begin or contact us today

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