Providing Proof of Income for a Mortgage

In this article, we explain how to prove income for a mortgage application and the nuances that might come with being a contractor, a self-employed borrower, or an applicant with supplemental income.

How to prove income for a mortgage

Lenders will accept various documentation proving how much you earn as part of a mortgage application. For employees, this is relatively straightforward, but for those who are self-employed, have multiple income streams, or are new to their current position, it may require submitting extra proof.

In terms of affordability, lenders will first look at a multiple of your gross income when assessing how much you can borrow. However, before approving your application, they will also assess your outgoings versus your net income – or ‘take home’ pay – to confirm you have sufficient disposable income to cover the repayments.

If you’re unsure of what paperwork you should submit, a broker can assess your situation and advise accordingly, but as a starting point, see the below.

Proof of income for an employee:

If you work as a PAYE employee, lenders verify income by asking for the following:

• Payslips: Mortgage lenders typically request payslips for 3 to 6 months to assess income stability. However, requirements vary, so check with your mortgage broker and lender. Other documents like P60 forms or bank statements may also be needed during application.

In some cases, as well as payslips, a lender might require:

• P60s: Presenting the past 2 years’ P60 forms is a common requirement.
• Employment contract: If you are a contractor or can’t produce three months’ payslips, perhaps because you’re starting a new job, you could be asked for this.

What else counts as income for a mortgage?

Outside of a salary, it’s not unusual for people to have other forms of income. Depending on the type of income and the lender’s criteria, it may or may not be counted as part of your income. Even if it is, it could be that only a percentage is attributed to the final income amount. The table below outlines possible supplemental income and the needed proof.

Can you include dividends for income purposes?

Yes, if you’re a company director of a limited company, certain lenders will consider both your basic salary and any dividends paid when calculating your borrowing limit.

Some lenders will ask for at least 2-3 years of certified accounts as evidence and expect a director’s share of their business to be in excess of 20%-25%.
A broker would be able to share which lenders would accept the various types of supplemental income and their eligibility criteria.

How a mortgage broker can help with your proof of income

With expert knowledge of exactly what counts as proof of income for a mortgage in the UK, a broker will instantly make the application process much less stressful.

They can:

• Provide bespoke advice based on your income, sharing what evidence can be used to qualify for a mortgage in your situation and how many months’ or years’ worth you’ll need to supply.
• Consult whether your supplemental income could count towards your affordability assessment.
• Share which lenders are more lenient regarding proof of earnings for a mortgage and which might be best depending on whether you’re employed or self-employed.

What to do if you don’t have enough proof of earnings

Perhaps you’ve only recently entered the workplace or switched to self-employed and have no accounts as evidence to submit. If that’s the case, don’t panic. If you reach out to an expert, they can advise you on any lenders who don’t require as many months’ or years’ worth of payslips or accounts as possible and advise you on potential alternatives you could provide.

How to prove rental income for a buy-to-let property

If you plan on purchasing a home to rent it out and use the rental income to cover the mortgage repayments, a lender must be comfortable that this will be sufficient. Most lenders require that the rental income be between 125% and 145% of the mortgage repayments. Lenders will arrange a property valuation, and the surveyor will advise what they believe the property would rent for on the open market.

Sidenote: In this scenario, it’s important to remember that some lenders require an applicant to earn a minimum amount, which is often £25,000 a year.

Get matched to a broker to help prove your income.

Whether it’s your first time applying for a mortgage, you have multiple income streams, or you want to apply without any proof of income, specialist expertise can really make a difference to your future as a homeowner.

Our mortgage broker service can match you to a specialist who understands the intricacies of the various proof of income requirements and can help you navigate your specific application needs.

Call 0330 818 7026 or fill out an enquiry form to be matched to a mortgage broker for a free consultation today.