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Paying into a pension is rarely a bad thing — whether it’s through your employer, a private plan, or a self-employed scheme. But when it comes to getting a mortgage, some borrowers worry that pension contributions could reduce how much they can borrow.
So, do lenders penalise you for saving for the future? The short answer is — some do, some don’t. Let’s take a closer look.
At Strive, we’re whole-of-market mortgage brokers and experts in maximising affordability, helping you secure the most from your income while keeping your finances balanced.
Which Lenders Factor In Pension deductions to affordability?
Different lenders take different views when it comes to affordability.
- Some lenders use gross income (before deductions), meaning they don’t factor pension contributions, tax, or other deductions into their affordability calculations.
- Others assess affordability based on net pay, taking pension deductions and other outgoings into account — which can slightly reduce the amount you can borrow.
Lenders such as NatWest tend to have minimal impact from pension deductions, while Santander and a few others can be more restrictive, especially for borrowers with large pension contributions.
| Pension Can Be Ignored | Pension Not Ignored |
|---|---|
| Bank of Ireland, Bespoke BOI, Barclays, Nationwide Building Society, Metro Bank, HSBC, Clydesdale Bank, Bath Building Society, Stafford Building Society, TSB, The Co-operative for Intermediaries, Newcastle for Intermediaries, Skipton Building Society, Atom Bank, Halifax, Family Building Society, Principality Building Society, Gen H, Vida Homeloans, Pepper Money, The Mortgage Lender, Kensington Mortgages, Accord Mortgages, Aldermore, MPowered Mortgages, Hanley Economic Building Society, Leeds Building Society, Kent Reliance. | NatWest, West Brom Building Society, Harpenden Building Society, Santander, Marsden Building Society, Hodge, Market Harborough Building Society, Vernon Building Society, Virgin Money, United Trust Bank, Tipton Building Society, Together, Darlington Intermediaries, Foundation Home Loans, Coventry Building Society, Precise Mortgages, Nottingham Building Society, Cambridge Building Society. |
How Much Difference Does It Make?
The effect can vary significantly. For most borrowers, the impact is small — but for those contributing heavily (for example, 10–20% of their salary), it can make a noticeable difference.
- Minimal impact: Lenders like NatWest and Halifax typically use gross income models, so your borrowing isn’t heavily affected.
- Moderate impact: Some high-street banks, such as Santander, may deduct pension contributions from your available income.
Even a small difference in affordability can change the lender that’s most suitable for your situation, which is why it’s important to compare options.
Should You Stop or Pause Pension Contributions?
It might seem tempting to pause pension payments to boost affordability — but it’s rarely a good idea.
Here’s why:
- Opting out can affect your long-term retirement savings.
- It can be difficult to rejoin certain schemes after opting out.
- There are plenty of lenders who won’t penalise you for contributing, so there’s usually no need to stop.
Instead of cancelling your pension, it’s often better to work with a broker who knows which lenders to approach.
Benefits of Having a Pension When Applying for a Mortgage
Having an active pension can actually help your mortgage case in some ways.
Some lenders allow you to borrow past state retirement age if you’re actively contributing to a pension or can evidence ongoing retirement planning. Regular contributions show long-term financial responsibility — something lenders look on favourably.
In many cases, this can allow borrowing terms up to age 75 or even 80, whereas borrowers without a pension might face shorter maximum terms.
How Strive Can Help
At Strive, we specialise in helping clients maximise mortgage affordability — even when lenders assess income differently.
We work with the whole of market, comparing lenders that ignore pension deductions against those that factor them in, so you can keep contributing to your future without limiting your present opportunities.
Our team uses advanced sourcing tools to identify which lenders offer the most generous affordability models based on your income, pension, and goals. Whether you’re employed, self-employed, or part of a company pension scheme, we’ll find the best fit for you
Outstanding service and clear communication are at the core of what we do. But don’t just take our word for it—read firsthand experiences from our clients and discover why they rate us a 5-star mortgage broker.
Jamie Elvin
Jamie is an expert in all things mortgages, and our most experienced broker. Connect with Jamie and get started to see how Strive Mortgages can help you.
