Is it possible to get a mortgage if I do salary sacrifice?

by Aaron Strutt

Jan 04 2025

Yes, you can still get a mortgage if you use a salary sacrifice scheme, but it may affect how much you can borrow. Lenders typically assess affordability based on your gross income after deductions, so if your salary sacrifice reduces your taxable income, it might lower the amount a bank is willing to lend.

Banks and building societies have different lending policies when calculating the maximum amount an applicant can borrow. Some lenders say they can ignore salary sacrifice deductions and apply deductions on an individual basis, while others can provide multiple enhanced incomes to enhance the loan size.

If you are struggling to borrow the amount you need, assessing the market and finding a lender who will be more generous with affordability calculations makes sense. As a guide, lenders offer between four and six times single and joint incomes.

What gets deducted in salary sacrifice?

Salary sacrifice involves giving up a portion of your pre-tax salary in exchange for benefits like:

• Pension contributions – This is the most common type of salary sacrifice and can reduce your mortgage affordability.
• Childcare vouchers - (though this has mostly been replaced by Tax-Free Childcare).
• Cycle-to-work schemes – Typically small deductions, but still considered.
• Company car scheme – Lenders may also factor in the Benefit in Kind (BiK) tax if you sacrifice salary for a company car.
• Private health insurance – Some employers offer this as a salary sacrifice option.

How it affects mortgage applications

 – This is the most common type of salary sacrifice and can reduce your mortgage affordability.

Lenders typically use your post-sacrifice income for affordability checks.

• Some lenders may add back pension contributions if they consider it a voluntary deduction.
• If your salary sacrifice significantly reduces your taxable income, you might qualify for a smaller mortgage.

What you can do if your salary sacrifice is reducing your maximum loan size?

1. Check lender policies – Some lenders are more flexible with salary sacrifice. 
2. Provide full income proof – Some banks might allow you to use your pre-sacrifice income if you show evidence.
3. Speak to a mortgage broker – Trinity Financial brokers consistently help clients to secure mortgage loans with generous loan sizes when they have deductions showing on their payslips. 

How salary sacrifice affects mortgage applications

Salary sacrifice involves agreeing to reduce your gross salary in exchange for non-cash benefits, such as enhanced pension contributions, childcare vouchers, or other perks. While this can offer tax advantages, it also reduces your taxable income, which is a key factor lenders consider when assessing mortgage affordability. As a result, your borrowing capacity might be lower than if you weren't participating in a salary sacrifice scheme.

Lenders' approaches to salary sacrifice

Lenders vary in how they assess income for applicants involved in salary sacrifice schemes:

• Standard Assessment: Some lenders will consider your income after salary sacrifice deductions, which could limit the amount you're eligible to borrow.
• Flexible Assessment: Certain lenders may be more accommodating, especially if the salary sacrifice is for pension contributions. They might consider adding back these contributions to your income when calculating affordability.

Call Trinity Financial on 020 7016 0790 to secure a salary sacrifice mortgage, book a consultation, or complete our mortgage questionnaire. 

The information contained within was correct at the time of publication but is subject to change.

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