Getting a Mortgage After a Pay Rise
See how a pay rise could increase your chance of approval or increase the amount you can borrow with help from a specialist broker
Have you recently been given a pay rise?
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In this article, we’ll explain how to find a lender who’s willing to offer you a mortgage based on your new income, how long you should wait after a pay increase to apply, and why using a mortgage broker can help boost your chances of success.
Getting a mortgage after a salary increase
If your employer has just confirmed that you’re getting a pay rise, some mortgage lenders will be happy to let you borrow against your new income, but there’s a good chance they will want to see documentary evidence from your employer confirming your salary increase.
Some lenders, however, are stricter than others on this and whether the mortgage you’re offered is based on your original salary or your pending wage hike will depend on which one you approach.
There are mortgage providers who will subject customers with a pending pay rise to additional underwriter scrutiny, and others who won’t even consider allowing you to borrow against your higher income until the pay increase has come into effect.
How to boost your chances of getting a mortgage based on your new salary
If you have a pending pay rise or had one come into effect just recently, speaking to a mortgage broker is recommended before you apply for a mortgage. The last thing you want is to approach a lender directly and be told you can only borrow against your original salary. This could mean missing out on the mortgage you need, and if you were to approach multiple lenders in search of one who’s willing to accept your pay rise, your credit report could be impacted.
The right mortgage broker can help you avoid all of this by matching you with the ideal mortgage lender – one who’s willing to offer you a great mortgage deal based on your new income, with minimal caveats attached.
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How long should you wait to apply?
As long as you have documentary evidence from your employer to confirm a recent pay rise, there are mortgage lenders who might consider letting you borrow against your new salary right away. Others, however, will request at least one wage slip with your higher income on it, and you may even come across lenders who will insist on three months’ wage slips.
One of the main benefits of using a mortgage broker in this situation is that they could potentially help you save time. By introducing you to a mortgage lender who accepts pending pay rises right away, you might not have to delay your plans unnecessarily.
What if you get a pay rise during a mortgage application?
If you are already in the process of your mortgage application and you receive confirmation of an incoming pay rise, things can be more complicated. Whether the deal you get is based on your previous wage or your new one will depend on how far into the application process you are, as well as the mortgage lender’s stance on people borrowing based on recent pay rises.
For example, if you’ve been offered an agreement in principle (AIP) based on your original salary, there may be scope to re-negotiate with your lender and thrash out a deal based on your increased income. If your lender of choice doesn’t acknowledge recent pay rises, there may be scope to move your application to one that does, if you’re only at the AIP stage.
The further along you are in the process, the greater the risk of losing any non-refundable fees and charges you have paid upfront if you decide to move your mortgage elsewhere.
If you’re yet to sign the binding mortgage offer and have just been offered a pay rise, it’s a good idea to speak to a mortgage broker for advice. They can spearhead re-negotiations with your lender and advise you on whether it’s in your best interest to move your application elsewhere to borrow against your new salary.
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How to evidence a pay rise to a mortgage lender
Most mortgage lenders will accept a letter from your employer confirming your pay rise, your new salary and the date it’s due to kick in as proof of your new wage, but some might also request a copy of your first wage slip with your higher salary on it.
Mortgage providers with a stricter stance on pending and recent pay rises might ask for extra evidence to confirm your salary increase, such as…
- Your latest contract of permanent employment
- A salary notification letter
- An annual income increase letter
- A variation letter from previous salary terms (e.g. increase in working hours)
Some lenders may also insist that confirmation letters aren’t handwritten or amended.
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Getting a mortgage after a promotion
If the reason your pay has risen is because of a work promotion, this can make things slightly more complicated where mortgage applications are concerned. At some mortgage lenders, you’d be treated as starting a new job, and if your new role comes with a probationary period, that can further reduce the number of approachable mortgage providers.
While there are lenders who will consider applications under these circumstances with minimal caveats, others will only do so if certain conditions are met, such as…
- Your new role is due to start within three months of the application
- You’ve been working in the same industry for at least 12 months
- You have documentary evidence of your new job offer and salary increase
- You can provide at least one wage slip with your new salary on it
- The strictest lenders might ask you to wait 3-6 months before applying
While it’s possible to get a mortgage in a new job role or probationary period, there’s always the chance you’ll come across a lender who feels you’re a higher-risk borrower if either of those things applies to you. They might question whether your employment is secure. This might mean having to delay your plans or settle for a higher interest rate.
Get matched with an expert mortgage broker today
Professional advice is recommended if you’re applying for a mortgage with a recent or pending pay rise, as this can boost your chances of being able to borrow against your new salary with minimal caveats. The right mortgage broker can match you with the lender who’s best placed to let you do this, and you won’t have to lift a finger while they arrange the deal.
We offer a free broker-matching service that will take your needs and circumstances into account and pair you up with the ideal mortgage advisor for you, in this case, somebody who has a strong track record helping people get a mortgage after a pay rise.
Call us today on 0808 189 2301 or make an enquiry and we’ll set up a free, no-obligation chat between you and your perfect mortgage broker today.
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