Starting a pension whilst saving for a mortgage

Luker

so I’ve reached the wrong side of my 40’s and I have no pension. I have a fairly good income and put a substantial amount into a savings account every month to help apply for a mortgage. I got AIP and they offered 4x my salary.
if I start a pension (which I really want to do) I would need to reduce my savings. Would this come against me applying for a mortgage? When I was applying for AIP, they asked my gross and take home pay. I was holding off the pension until I found a property but I’m having no joy there and time is pushing on. I will be grateful for any advice.

greyday

A pension is the best investment you can make for your future self, once you have budgeted properly and can show you can afford the mortgage and necessities, go for it.

JVince

Can't see any issue. Easy enough to reduce pension payments if necessary.

I actually think it would be seen as favourable by the bank.

ctomas

yes, as far as I understand they will not take your pension contributions as ability to save so might impact you if you cannot show an appropriate savings amount. One option would be to reduce the penion temporarily and save the net pay, you can then up to late next year top up you pension for 2024 and get the tax back on the contribution.

JVince

https://www.boards.ie/discussion/comment/122413997#Comment_122413997

You might be mixing up pension contributions from a company and near obligatory contribution from the employee.

The OP here seems to be looking at a personal pension plan.

With such a plan you can stop contributions immediately if required with no penalty. Hence a bank will not see this negatively in any way.

Alkers

Does your employer make a contribution to your pension?

When are you planning to buy the house?

RichardAnd

Starting a pension is something one cannot do too soon. My first real job had a mandatory pension scheme, and it was a great idea because at 25, I wouldn't have had the sense to start one myself. It's a habit I've maintained ever since.

Most companies will have some sort of pension scheme, and even if it's not a great one, I suggest that you sign up to it none the less. There are plenty of ways to start one yourself however.

Geuze

If the planned house purchase is soon, I suggest holding off on starting the pension until after the mortgage is drawn down.

Bear in mind that AE is starting next year.

Luker

https://www.boards.ie/discussion/comment/122414249#Comment_122414249

My employer does not make a contribution but only facilitates deductions from salary. I’m hoping to buy in the next few months, well I was hoping to buy by now but not found the right place yet

Galwayguy35

Was 40 myself before I started a pension scheme.

In my present job the company matches my monthly payment so it all adds up.

By the time we retire it will be impossible to live on the OAP without savings.

Luker

https://www.boards.ie/discussion/comment/122417965#Comment_122417965

I’ll be same age really. Your lucky your employer contributes - this is so important

greyday

https://www.boards.ie/discussion/comment/122417942#Comment_122417942

Your employer and government will start paying into pension at the start of next year with auto enrollment.

Alkers

https://www.boards.ie/discussion/comment/122417942#Comment_122417942

In that case, wait until you buy the house, then start your pension

witchgirl26

https://www.boards.ie/discussion/comment/122417977#Comment_122417977

This! At this point, it might be worth holding off until auto enrolement comes into play as the employer will have to pay in as well.

As for pension contributions impacting ability to buy a house - I've had a pension coming out of my salary since I was in my late 20's & when I bought 6 years ago, it didn't affect it much. Especially if it's deducted at source. While yes it technically reduces the amount you can save each month, they do take it into consideration as a type of saving as essentially that's what it is.