To take a pension contribution break to get a better mortgage?

[Brankolium]

There is a huge disparity between what the bank will lend me when I'm not making pension contributions versus when I am making contributions. The lending difference equates to difference between a house being big enough and really not big enough.

Can I opt out of the NHS pension for the purposes of getting a better mortgage amount and then rejoin later? Or is rejoining after that too difficult?

In terms of mortgage repayments it is definitely affordable either way, so I'm not worried in that respect. I'm just unsure about the implications of temporarily leaving the pension.

Has anyone else done this? Any help gratefully received!

Halifax is next on my list Rh, thank you.

If you are pre 2015 then really really dont stop the pension you wont ever get another as good! You could ask if the scheme has any option for contribution holiday with no penalties but i would really doubt it. Our mortgage is santander - they never asked about our pension contributions, might be worth a try!

You could try a broker like London & Country. They don't charge you and have a good idea of who will lend to you fro their knowledge of the market.

I used them to get a mortgage using maintenance as income, which lots of mortgage providers won't count. I was impressed they came up with options from several banks, they appear to be whole of market.

As I understand it unless you were within 10 years of normal pensionable age in 2015 then you would have automatically moved over to the 2015 pension scheme.

I personally would not come out of the pension even for a few months. My fil has drummed into me and DP to protect our NHS pension. Even the newer scheme is better than many others. I'd be too afraid of getting used to having the extra money and never re-enter the pension.

I work for nationwide and can categorically say that they do not take pension contributions into account when calculating mortgage affordability

As others have said, don't leave your pension scheme. Speak to a mortgage broker or IFA who will see who which lender can lend you the amount you need. If you want to go with HSBC, ask if extending the term (if practical) would change affordability. Eg 30 / 35 / 40 years instead of 25. Then just make over payments to have it repaid over the original term.

Mortgage brokers will work hard to find you what you want.

If you really want to go with HSBC then could you just reduce your pension contributions to the minimum amount (eg £10 per month) if this is possible? That way you're not exiting the scheme and can increase your contributions as soon as your mortgage has gone through.

I have a hsbc mortgage and contribute a huge chunk to pension. It was treated as just an optional outgoing like savings as it can be cancelled any time. Are you getting advice through hsbc? If so pause the process and ring the unadvised hotline for facts.

Any hsbc mortgage advisor who recommends you stop contributing to a pension to afford a mortgage needs to be shopped. Tell hsbc via Twitter

Use s broker. A good one will check the market widely and recommend the best provider based on your circumstances.

This is why I have a mortgage with some building society I had never heard of before!

Suki the nhs scheme doesn't work like that. You are in our you are out. You have no choice of how much you put into it. It is calculated as a % of your pay. And an increasing % of your pay depending upon how much you earn (or how much you would earn full time equivalent if you are actually part time).

It is best to think of it as a membership fee rather than a pension in the traditional sense.Because what you get out at the end bears very little resemblance to what you put in in the first place. It is designed to be confusing (especially the new 2015 scheme) so member cannot understand it. And if you ask for clear details such as 'how much would a 3 month break in payments cost me when I come to retire?' Noone will be able to answer it.

It is so dependent upon multiple factors that I don't think we can give you definitive response.

More than you'd think.

Definitely don't leave if you are in the pre 2015 scheme.

But when you say not by much.... are you sure you are still in it? How old are you? Almost everyone was automatically transferred to the 2015 scheme whether you wanted to be or not. Your only option was to keep your old pension contributions in the old scheme but not pay into it anymore. In effect to get two pensions one that could pay out at 65 and the other that will pay out at national retirement age... whenever that may be.

Thanks for all the comments and advice. I think the pension tinkering is off the table as it sounds too risky.

I've looked at Halifax's basic mortgage calculator on their website and it does look a smidge more promising than HSBC's.

I'm now impatiently waiting for the weekend to finish so I can phone Halifax and (if they don't work out) investigate a broker.

smu06set makes some very valid points, you may end up on a far worse scheme if you leave and re join and loose the continuity of years. Minor point, but then have two schemes to sort out at retirement which would be a PITA. There are a lot of lenders out there to try first. Stopping the pension scheme is a drastic approach. Try other lenders first. I always recommend London & Country, I'm not linked to them, but use them personally and in a previous work life and they are very good, and free. They know all the lenders so will instantly know which ones will deduct pension contributions.

Can definitely confirm earlier comment that Nationwide ignore pension contributions.

I had a narrow escape in the pensions opt-out scandal back in the 80s so I just want to add my voice to everyone saying this sounds like a seriously bad idea, especially if you're in a final salary scheme. Also I believe breaking continuity could have implications further down the line e.g. if you're ever made redundant.

If any financial adviser is even entertaining this idea then that is shocking.

I would try Nationwide over halifax personally. To get a decent broker visit www.unbiased.co.uk

Ok, Nationwide and Halifax, followed by a mortgage broker are on tomorrow morning's to-do list.

Genuinely, a really big thanks to all. And epecially to Rh204, lionsleepstonight, HerBluebiro, DailyFail1, and smu06set .