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
|
