Applying for a Mortgage with Non-Mainstream Income
Professional advice from an independent brokerage team about proving the validity of your annual earnings to qualify for mortgage lending - even if your income doesn't originate from conventional employment or business sources.
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Error: Yearly income income must be between £1 and £10,000,000.
Error: Regular bonus must be between £1 and £10,000,000.
Based on your yearly income,
you may be able to borrow
Most lenders will let you borrow 4.5 times your annual salary so, as long as you have a standard 10% deposit, you should be able to borrow this much.
Depending on your personal circumstances, some lenders may let you borrow 5 times your salary.
Lenders usually cap the amount they lend at 5.5 times your salary, so it’s unlikely you’ll be able to borrow more than this.
Applying for a Mortgage with Non-Mainstream Income
Mortgage lenders tend to prefer applicants with stable, steady PAYE employment. However, millions of people earn variable revenue and might have multiple different lines of work!
Some of the examples of non-mainstream income include:
- Pay as a trainee or apprentice.
- Dividend income.
- Self-employed people and business owners.
- LLPs and partnerships.
- Income from trusts.
- Part-time, temporary and zero-hours workers.
Other mortgage applicants earn a salary, but most of their income is from bonuses and commissions.
This guide will explain how non-mainstream income mortgages are calculated and where to find the best deals.
How Do Mortgage Lenders Evaluate Different Types of Work?
The stability of your employment will make a big difference to your mortgage application. Some of the most common working situations include:
- Self-employed applicants can have varied income, a mixture of contracts and ad hoc work. This category includes freelancers, contractors, gig workers and company directors.
- Professionals such as doctors and architects are often self-employed and may earn less as a junior, increasing substantially with professional experience.
- Workers in a new role can also find it tricky to get a mortgage, as most lenders want to see at least three months of payslips.
- Zero hours employees have the challenge of not being able to guarantee their income. Specialist lenders can help in this scenario.
- Part-time workers also have a challenge to prove affordability - although if you have a good deposit and can provide your income will cover the mortgage payments, you will usually find a competitive loan.
- Temporary employees will need to demonstrate that they will keep up with the mortgage payments when their current contract ends.
- Fixed income applicants might earn income through a pension scheme, for example, and the appetite for a mortgage will depend on the lender's risk profile.
Still, more examples of non-mainstream income include:
- Bonds and government bonds.
- Disability pensions.
- Loan stocks.
- Fixed interest securities.
Your chances of mortgage approval depend on:
- How much you earn.
- Your credit history.
- How much you want to borrow.
- The deposit you have available.
For disability benefit recipients, you will usually find a fixed-income mortgage, as several lenders will accept this form of income.
In some cases, the lender will only include 75% of your annual income to offset any risk that your earnings will drop.
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Can I Get a Mortgage With a Variable Income?
There are thousands of jobs with variable incomes, including employed people who are paid commissions or bonuses.
Lenders will consider your average annual income, and the amount they can lend varies considerably depending on how experienced they are in lending to people with your income stream.
If you have no income, it's much less likely that you will find a mortgage, but there are exceptions. For example, if you are an experienced investment landlord or have a high net worth, you might be eligible for a mortgage even without an income stream.
You'll need to demonstrate that you have the funds or a new income stream coming into place to pay back the mortgage.
Some lenders are more flexible when it comes to varied income, so they might consider:
- Newly self-employed people without a long trading history but who can prove their future earnings and provide an accountant's report supporting their income projections.
- Applicants who are out of work yet have a contract showing they are about to start a new role.
- Company owners who haven't withdrawn their share of profits, and left them in the business, can sometimes use this in lieu of other income streams.
Non-mainstream income mortgages are very much a case-by-case scenario, and a lot depends on the specific circumstances.
Are There Mortgages for Limited Liability Partnerships?
Most UK partnerships are set up as an LLP. Each partner is self-employed, and declares their income and submits a tax return like any other self-employed person.
Lenders typically want to see three years of accounts or tax returns, although this is flexible depending on the mortgage provider.
Can I Get a Mortgage If I Receive Trust Income?
It is common for a mortgage lender to ask for a guarantor before offering a trust income mortgage.
However, many lenders will be happy to lend, provided the income is stable, and you have documentation to meet the affordability assessment.
Are There Mortgages for Apprentices?
Apprentices are often paid a very low rate. However, there is the benefit of gaining professional experience and often the opportunity of a better-paid role when the apprenticeship is complete.
Lenders will look at lots of factors, such as:
- Your basic salary - and whether this meets their minimum if there is one.
- Any overtime of bonuses you earn in addition.
- How secure the job is and the likelihood of being offered a permanent role.
- The amount you want to borrow, and if your income is sufficient to make the repayments.
- Your deposit - usually at least 5% and sometimes more.
- Whether you have a guarantor or support from family members.
Can I Get a Mortgage Based on Bursary Earnings?
Bursaries are paid to students to cover their living costs and some tuition charges to enable them to continue their studies. Some of the common bursaries are paid to NHS students, for example.
The bonus is that bursaries are not taxable or liable for National Insurance, so, most of the time, 100% of the income is received.
When considering lending to an applicant receiving a bursary, a mortgage provider will look at:
- How likely it is that you will be employed after the training period.
- Any other income you earn, for example, from part-time work.
- The value of the monthly bursary.
- Whether you receive other benefits or allowances.
- How much deposit you have available.
- Whether you have a guarantor.
Can Dividends Be Used Towards a Mortgage Affordability Assessment?
It's common for business owners to pay themselves a low salary and then take out a dividend from the profits at the end of the year.
Dividends are certainly a part of your income, and so it is vital to choose a lender who will include 100% of this for your mortgage calculation.
Some lenders will also include retained profit that you are entitled to but have chosen to return in your business.
Can I Get a Mortgage If I Am on Benefits?
Possibly, but it depends on what benefits you receive and how closely you meet the other lending criteria.
Lenders will need to know what income you receive and any other revenue streams.
There are mortgage lenders who will include a range of benefits in their calculations, including child benefits, working tax credits, pension credits, incapacity benefits, carer’s allowances, maternity allowances and widow's pensions.
Other lenders will not consider any benefits at all, so it is crucial to consult an independent broker who can support your application.
Not if you want government support towards your mortgage application. However, if you own a home, then you can sometimes claim help towards the interest charges.
The most commonly accepted benefits are pensions and disability benefits. Other benefits are considered on a case-by-case basis, depending on the lender's policies.
Potentially, some lenders might consider this type of benefit - give us a call to discuss getting a mortgage based on income from unemployment benefits.
Child support is not typically part of your income, although some lenders will include this in your affordability assessment. Maintenance payments are more likely to be included, although that depends on the history of income and whether you have a court order to ensure the payments continue to be made.
Generally, yes. Disability living allowance is usually acceptable, although you will need to meet the other eligibility criteria to be approved.
That depends on the lender. Some will disregard tax credits, whereas others will add this income to your average yearly earnings before making a mortgage offer. Some lenders will include all of your tax credits, and others up to 60%. You will usually need statements or letters proving what credit you are entitled to.
It can be difficult for self-employed people to verify your income, and having no evidence or documentation can make it challenging to get a mortgage. Usually, you will need to provide bank statements, accounts or tax returns to show what you are earning, even if that's an average over the last three years.
It can, but you will need a niche lender with experience in cross-border income and mortgage applications.
Whatever your line of work, if you have a variable income or want to boost your earnings with benefits to borrow the mortgage you need, Revolution Brokers can help. Our team are experienced professionals in the world of non-mainstream income mortgages and will identify the right lenders to apply to. Give us a call on 0330 304 3040, or send a message to [email protected] to get your application started.
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The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature.
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