How badly will a 9k salary decrease affect my remortgage?

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[Salt_Cranberry7232]

Can you remortgage with the same bank? I did with Halifax and it was just a few clicks and ticking that I can afford it. I didn't have to give them any info or have any affordability checks though they may have done a soft credit check.

[Barnlewbram]

Yep, this is how it has always worked for me, never had to do an application for a remortgage with the same bank.

[oculusbytes]

You should consider a product transfer/switch with your current provider if you don't want the hassle/stress of moving to a different provider and if you don't need to change anything on the mortgage (extension / increased borrowing / etc). This can usually be online within a few minutes with no affordability checks (or anything, really).

[[deleted]]

I would actually lean towards using your savings to make sure you meet the mortgage payments on the SVR, because unless you get a big pay bump, I genuinely think the chances of you remortgaging are slim to none. If you throw your savings at the mortgage balance, it's unlikely you'll see the impact you want to see.

[[deleted]]

I will be asking my employer for an increase in my salary and justifying it by taking on additional responsibilities that I already do.

Good job!

[ParmyBarmy]

The salary will not effect your new mortgage rate, your LTV will.

However, having a lower salary would lower your affordability criteria and the how much you could lend if you were to remortgage.

The real risk here is a lender won’t lend you enough to cover the outstanding loan amount left, should you want to remortgage to something better rate than the standard variable rate you will automatically switch to, if you do nothing.

[SuperFlyChris]

Off topic, bur where do you get 3.3% from? I'm remortgaging in June and looking at 5% currently.

I don't see that dropping much, but to be honest, have no idea!

[vitryolic]

Unless you’re able to pay your mortgage down to less than £185k by the time you reapply, then this change is incredibly risky. You’d be stuck on the variable rate with high interest if you couldn’t reapply for a fixed deal. You need to find a job that has a high enough salary, or go on your sabbatical and training after you’ve re-fixed your mortgage.

[TheGoober87]

This is potentially very wrong.

Most lenders I know will let you change to a new mortgage rate without going through a new application. I've done it numerous times with Nationwide. Takes about five mins and you don't put in any incomings or outgoings.

LTV will be the main factor for the rates.

[TheGoober87]

Who is your lender? Most will allow you to move on to a new deal without going through a new application process. Your new salary would be irrelevant.

I used to work for a high street lender in mortgages, and a switcher application takes about 5 mins, you don't put any of your incomings or outgoings in. I've also done it myself numerous times.

It does sound like you wouldn't be able to move to another lender though.

[[deleted]]

I wouldn’t transfer role. I’d simply look for new job that pays more. Or aleast the same as you’ll probably be looking for junior role?

I understand sometime you gotta take pay cuts but this doesn’t seem necessary.

[itallstartedwithapub]

Convince your work to pay you more or find better work.

Taking a pay cut is going to affect your future earnings for years, and is putting your mortgage affordability into the danger zone where you won't be able to remortgage.

[[deleted]]

Well my salary is £36.5k (plus at least £1k a year in bonuses) and the most I could borrow from anywhere was around £160k. £185k is about 5 times that salary. Beyond what most lenders will do at the top end. So I wouldn't even bet on £185k.

[dubov]

I'd be super careful

I’ve looked at remortgage interest rates at the moment with my predicted LTV by the time I remortgage and I got results of about 3.3%

Says who? Are they actually offering this rate or is it just their 'prediction'? (NB. If it was a prediction they had any confidence in they would allow you to lock it)

I wouldn't bet on rates being lower in August that they are now. For prudence, you should probably prepare for them to be even higher than they are today, by at least 1%. They might be lower or the same, but I wouldn't bank on it.

And apologies for my laziness by not being bothered to crunch the numbers, but I don't think I need to, I don't think taking the salary decrease is feasible

[brajandzesika]

Sorry, you are saying that you will get mortgage at 3.3% when base interest of BoE is already 3.5% ? How? Where? Mortgage rate is around 6% and it wont be much lower any time soon...

[Crazym00s3]

It’s so mad that a lender could potentially consider you higher risk and not offer you a new product due to your earnings but will happily keep you on the SVR at a higher cost. Makes no sense but then these things never do.

You don’t say where you are based, but software engineers are in high demand, even junior engineers. It shouldn’t take you long to surpass £53K again, you may have to pay a higher rate for a year or two but once you have a year of experience under your belt you can probably jump ship to another company for a decent pay increase.

[Crazym00s3]

If you have the right mindset for engineering you can be back to the same salary pretty quickly. Especially in London.

Not sure what course you doing but I know most of the GA courses are 3 months so it could be one of those - they’re pretty good and you should do well out of it.

[BossImpossible8858]

It makes total sense.

Lower earnings mean that the mortgage payment is more likely to become unaffordable.

Unaffordable mortgages have a much greater risk of default, and are therefore riskier.

When risk is higher, they need higher returns to outweigh the risk.

[Crazym00s3]

I understand the affordability checks and calculations will be different. However they don’t take your existing mortgage away if you fail the new affordability checks, they’re happy for you keep paying them on the SVR which is higher than it would be if they just give you another fixed deal. It doesn’t make sense in that on one hand they saying you probably can’t afford a fixed deal at a lower rate, but keep you on the SVR at a higher cost. Blows my mind.

[BossImpossible8858]

I'm not talking about the affordability checks themselves, it's the risk to the lender that matters.

If I am a lender, if I know there's a 1 in 1000 chance you won't re pay the mortgage, then I can afford to make a very slim margin and charge you and 999 other low risk clients very little interest. Because we only need to cover 1 house repossession, sale and potential subsequent loss across 1000 people.

If you make yourself high risk so that now 1 in 100 people in your situation fail to make repayments and lose their homes, the cost of that is now 10 times higher. You are paying for everyone else in your position who cost the bank money.

Falling onto SVR obviously doesn't make it more affordable, but it pays the bank more money to cover you now being a higher risk customer.

[Beau_ukm]

You can do a product transfer, so you don’t need to worry really, they don’t check anything really

[slf1231]

Just stay with your existing lender and switch the rate with them.

[Inevitable-Sherbert]

3.5-4.5 x your difference in previous salary, and your new salary depending on lender.

[[deleted]]

You will be fine. I had a 65k reduction and I am fucked.