Do mortgage companies look at your future earnings?

[fabulousathome]

Hello. A first world problem as they say.

I just wanted to know if anyone has experience or knowledge of the current situation with the following scenario.

DS1, in his late 20s, has three more exams to take before he qualifies as a Chartered Accountant (ACA). He works full time for a large global accountancy firm in London. So far he has passed all the exams first time. After qualification he will (he assures me) be offered a job within his current firm and his pay will go up vastly, say by around £15k. He is not particularly well paid at the moment.

For various personal reasons he'd very much like to move from his current small property to a larger one (yes, he's very lucky to own anything and was also lucky enough to have help with a deposit). He would need to increase his mortgage to do so although he does have some savings to use too.

Would he be looked at as earning what he earns now or would a mortgage provider look at his future (from Summer 2017) earnings and give him a mortgage based on that? Somewhere in between the two would be be good.

I know that the criteria are very strict nowadays.

Many thanks for your help.

Current unless he has a signed contract for the increase I would think.

I think he might as well wait 6 months and then move once it's all sorted - what's the rush?

We just applied for a mortgage and I have been offered and accepted a new job starting in September. The broker we used said that often banks will look favourably on a new job starting which will earn more money but no more than around 4-6 months ahead. In the end we didn't need it but our plan was to apply in a few months time if we had ended up needing to use my new salary. Does he have a firm job offer and a letter?

5ish years ago Halifax offered me a very high borrowing multiplier on the basis that I was a trainee solicitor but soon to qualify (no future contract in hand yet). I think there are also specialist lenders like Wellesley (?) that may help. Generally though I think current salary is it.

Could he hang on until he's earning the higher amount?

When I qualified (10 years ago) also with a big 4, the answer was most definitely yes. Mortgage companies and banks were ringing me up desperate to offer me ridiculous amounts based on my future qualified salary. This was normal then. No idea if it still possible due to all that's happened in last few years but there were certainly special circumstances for qualifying accountants when I was training. Worth speaking to a mortgage advisor to see what they say, although as you say, criteria has become very strict nowadays.
Saying that, I got a mortgage when 6m pregnant (just after the new mortgage rules had come in) and they didn't even ask me what my return to work or mat leave pay plans were!

I think affordability would be based on current earnings without written confirmation of an increase

I thought it might be a no no. The rush is that he has a very difficult and aggressive Freeholder who does works to the small block of flats and has sent a number of huge bills. He tried for Right To Manage along with the other flats but sadly it was thrown out on a technicality.

The Freeholder has told him that he plans decoration to the outside and DS1 is scared of a huge bill.

The Freeholder is a very large company, (it was a different one when DS1 purchased the flat) and Googling them on the internet is horrifying. Many tennants have taken them to court for various reasons.

He's probably going to have to wait until after the exams.

And thank you everyone. Such a quick and informative response.

As far as I remember from selling a flat you have to declare any major works planned. It may be he would effectively take a hit on the cost anyway if the purchased knew they would have to pay £xk within a couple of months.

TBF OP, any conveyancing solicitor worth their salt will be able to find details of the future works and tell an onward purchaser, so selling now may not be much of a solution, unfortunately.

Damm. I guess a purchaser will just ask for money off to pay the future bill, unless there's loads of people that want it.

Last year the flat above was sold at an Open Day. 30 viewers and 8 offers in one day so he might be lucky.

He could take legal advice about disputing the cost of works?

The other thing (re selling) is that the market in some places is veeery slow at the moment. My bit of London, where things were flying out at Open Day last year, is very slow at the moment, with lots of reductions.