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Can I Use My Bonuses and Overtime on a Mortgage Application?

Our guide to finding the right lender if you need to factor in income from bonuses, overtime or commissions - and need your additional income built into your affordability assessment to qualify for the mortgage value you’re after.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

Almas Uddin2024-07-17
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Can I Use My Bonuses and Overtime on a Mortgage Application?

Many people receive a basic salary and then a larger proportion of their income through bonuses, regular overtime or commissions.

The Revolution Brokers team often hears from applicants who have been turned down for the mortgage they need since their regular bank will not include variable income or only a proportion of this revenue.

Here we'll look at mortgage options for applicants of varied income and how the process works!

For more help with finding a mortgage suited to your income structure, give us a call on 0330 304 3040, or drop a message to [email protected].

How Do Mortgage Lenders Assess Commission Income?

Lenders are all different and have policies about how they treat commissions. One of the most common scenarios is in sales positions, where your basic salary is topped up by commissions calculated against the sales achieved.

You might also be paid bonuses when you hit a KPI or at the end of a month or quarter.

A lot depends on the lender and how often you receive your bonus or commission payment. Some lenders only include monthly payments, and others only annual or quarterly commissions.

Most lenders who offer flexibility in accepting commission-based salaries like to see a history of payments to calculate how regularly this is paid and the average value.

It's also vital to work with an experienced broker if your commissions are worth more than your primary salary. You need a lender who includes 100% of your commission earnings in their calculations if you want to maximise the mortgage you can borrow.

Below you'll see the difference between Lender A and Lender B, owing to their policies on how they include commissions in their affordability assessment. This example is based on an applicant who earns:

  • £15,000 basic salary.
  • £30,000 a year in commissions.

Lender Policy on Commission Income

Total Income Included

Maximum Mortgage

Lender A - only incomes commission capped at the same value as basic salary

£15,000 salary plus £15,000 commissions.

Five times income policy = maximum mortgage of £150,000

Lender B - includes 100% of commission earnings

£15,000 salary plus £30,000 commissions.

On the same five times income policy = maximum mortgage of £225,000

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Do I Need a History of Earning Commissions to Get a Mortgage Approval?

It isn't mandatory with all lenders, but most prefer to see two or three years of regular commission earnings. Others will ask for a few months or a year's worth of payslips to work out your average commission.

Again, it all depends on the lender. Let's take the same commission earner, but with a difference between the last two years:

  • Last year - the applicant received a commission of £30,000, divided into four payments of £10,000, £5,000, £10,000 and £5,000
  • The year before - the employer paid a £20,000 commission split into £5,000 per quarter.

Three different lenders, all offering a mortgage at up to five times average annual income, might offer a very different mortgage maximum:

Lender Policy on Commission Income

Total Income Included

Maximum Mortgage

Lender A - includes 100% of commission over the last two years

£15,000 salary, plus £25,000 commission

£200,000

Lender B - includes 100% of commission over the last 12 months

£15,000 salary, plus £30,000 commission

£225,000

Lender C - includes income from the last quarter, averaged out over the year

£15,000 salary, plus £20,000 commission

£175,000

Is 100% of My Commission Included in a Mortgage Calculation?

Not always, no. Some lenders include 100% of your commissions, and others have a cap, for example, of 50%.

The below table shows what that looks like for the same applicant, with a £15,000 basic salary and £30,000 of commission, with three lenders all offering up to five times annual income as a mortgage cap.

Lender Policy on Commission Income

Total Income Included

Maximum Mortgage

Lender A - will not consider commission earnings

£15,000 basic salary £0 commission

£75,000

Lender B - includes 50% of commission earnings

£15,000 basic salary + £15,000 commission

£150,000

Lender C - includes 100% of commission earnings

£15,000 basic salary + £30,000 commission

£225,000

How Does Mortgage Affordability Work if My Income is Commission-Based?

Lenders always need to calculate affordability to be assured that you can afford to keep up with the repayments.

This calculation depends on the factors we have explored in terms of calculating your commission income and how much is included in the affordability assessment.

Some lenders will offer up to three times your annual salary, and others four, five, or even six times, so it's essential to apply to the right lender.

Can I Get a Mortgage Based on My Bonuses?

Bonuses work a lot like commissions. Lenders will consider:

  • How long you have been earning bonuses.
  • Whether your bonus is paid consistently, and how regularly.
  • The value of your bonuses compared to your basic wage.
  • Whether they include a percentage of that bonus, or all of it, in their calculations.
  • Affordability, depending on how many times your annual average salary the lender offers.

Can I Get a Mortgage Based on Bonuses With Bad Credit?

Bad credit makes it harder to get a mortgage, so it's crucial to consult a whole-of-market broker to understand which lender is more likely to approve your application.

There are niche bad credit lenders who will consider applicants even where severe adverse credit history exists, but you should always seek professional advice.

Revolution Brokers is a whole-of-market broker, so we can analyse the deals available and help structure your application to mitigate the risk of having bad credit.

Can I Get a Mortgage With Commission Income for Any Property?

Another risk factor is the type of property you wish to buy. Anything classed as non-standard might need a specialist mortgage lender, for example:

  • Thatched cottages
  • Timber or steel-framed properties

Having a variable income and borrowing against a non-standard property makes your application a higher risk on two fronts. Therefore, it is highly advisable to seek support from the Revolution team to improve your mortgage approval chances.

Are There Buy to Let Mortgages Based on Variable Income?

There are, although some lenders have caps and criteria that you will need to meet. These might include:

  • Having a clean credit history.
  • A requisite number of months or years experience as a buy to let landlord.
  • Earning a minimum amount per year - often around £25,000.
  • Being within an age cap, usually up to 75 or 85 for those lenders who have a maximum.

How Can I Prove How Much Commission or Bonus I Earn on a Mortgage Application?

Usually, lenders will want to see:

  • Your P60 from the most recent year.
  • At least three months of payslips with itemised bonuses and commissions.

If your application is higher risk, for example, because you have bad credit, you might need to provide up to a year's worth of payment evidence.

Mortgage Support for Bonus of Commission Earners

It is by no means impossible to find a mortgage based on your regular bonuses or commissions. Still, given the wide variety of ways a mortgage lender will assess this income, it is critical to seek professional support to direct your application to the right provider.

Contact Business finance broker on 0330 304 3040, or email us at [email protected] for more information and to find the mortgage borrowing you require.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

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FCA disclaimer

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.

We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.

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