Even though the situation on the 10y front is grim I’m contemplating getting a mortgage on a property soon (soon = within 2 yrs).
I’m working 80% (by choice), my partner is at 70% (also by choice), the rest is family time with kids.
How are the mortgage calculations done with such a setup?
Let’s say for simplicity that we both could earn 100k @ 100%, 200k total, but now we just make a total of 150k pa. Say we need 175k total income for the mortgage - will the bank see this potential or do we need to raise our work allocations only to get the mortgage? How long do we need to stay on a higher salary / what history of income to they need on a certain level? Can we reduce back to our original allocation after the mortgage is paid out to us?
Does anyone have first-hand information (either because they work with mortgages or have been through a similar case)?
The bank will ask for your income statements and your tax declaration. The % of work, they don’t care, you have to earn enough money for getting a mortgage.
Not a specialist, but from what I understand: if your salary is temporary lower than usual, shouldn’t be a problem also, as they would rather look at few years average and what you declare it the tax declaration.
In our case Raiffeisen took the average of all incomes for their calculations - not only salaries, but also dividends, rents etc over the last 3 years.
what I’m trying to say is that we CAN earn but are probably NOT earning now (for the last 2-3 years).
If I adjust this temporarily, that’ll be a spike - hence, first-hand info would be nice.
This depends on the institution. I only needed to send the tax declaration / salary slip of the last year (PK Post). So in my case, it would not have mattered if this salary was only temporary. Other institutions (e.g, Raiffeisen) seem to require information from more years.
But in general, it does not matter to your mortgage lender what you potentially could earn, only what you currently earn.
The affordability calculations will be based on your present situation. However, it is important to consider that the bank will review your situation on a periodic basis to see if you continue to meet affordability requirements. If you do not, you can lose the mortgage. So only get a mortgage if you expect your financial situation to either remain the same or improve.
they don’t recalculate until the refinancing comes though, do they?
are you obliged to send your tax reports to the bank every year, or how would they otherwise know?
It will depend of the contract you sign with the bank. They can put any clause in it, notably asking for documents during the mortgage duration.
I won’t play with the affordability as you may plan to do. You’ll have everything to lose in case of control.
Agree with the others, don’t do it.
Also usually they would propose to have your main accounts with them (for a % benefit in the rate) if you don’t already, and you can easily see how that would expose your income changes.
Different angle here, these checks are basically compliance for the bank. They need to tick the boxes in order to lend you money. They probably have a risk model that determines how much they choose to ask of you. So, from my point of view, if you are able to satisfy their criteria for the period they define I don’t see why you shouldn’t take the mortgage.
However, YOU are taking on debt, so it’s on you to keep your word and financial engagements. This is much more important IMHO: making sure you stay within your means. I also want to be very clear that I’m not advocating for fraud, you obviously need to be truthful during the process and not misrepresent your situation.
There are many legitimate reasons for which a borrower’s financial outlook can change, putting them in a situation where they would be no longer eligible for their existing loan. Think new dependents (children) or employment changes (lay-offs, reductions…). None of these should trigger any action from the bank, unless they suddenly have reason to worry you won’t be able to pay your dues.