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How to Prove Your Income for a Mortgage

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Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: May 16, 2022

When you apply for a mortgage, your lender wants to be sure you’re able to pay it back. They will also decide how much to lend you based on what they think you can afford. As such, they will want to know how much you earn.

But it’s not as simple as merely letting the lender know your annual salary. You’ll also need to prove you earn what you say you do, and in this article, we’ll look at what proof you will need.

What proof of earnings do I need for a mortgage?

Lenders’ requirements for proof of income for mortgage applications will differ.

Typically, earned income is evidenced in the following ways:

  • Payslips: The standard requirements are three months’ payslips and two years’ P60s although there are lenders who will accept less than this.
  • Contract: Not all lenders will need to see a copy of your contract if payslips are available, but for those are looking at getting a mortgage with a new job, the specialist lenders who may consider may request a signed employment contract.
  • Self-employed accounts: Most self-employed borrowers don’t have payslips to evidence all of their income (with some company director mortgage applications, the applicant usually has an amount of PAYE to cover their tax-free allowance and NI contributions). To evidence their income then, most lenders require either:
    • SA302 or Tax year overview (taken from HMRC website)
    • Full signed company accounts
    • Accountant’s reference (qualified and signed off to confirm income)
  • Bank statements: The majority of lenders will also want to see the net income shown on the payslips / earnings from self-employment, to marry up with the figures on the corresponding bank account, for at least the last 3 months. Those that don’t ask for this still require advisors to have checked this information and hold it on file in case it is required in future to evidence that a suitably affordable mortgage was recommended.

What other income is taken into account for a mortgage?

As well as providing proof of salary for a mortgage, you may have other sources of income that could be taken into account.

The table below will give you an idea of what counts as additional income for a mortgage in the eye of most UK lenders will accept and what percentage of them they’re likely to take into account…

Income Type % Taken Into Account
Employed basic salary Usually 100%
Self-employed drawings (net profit/ Salary & dividends) Usually 100%
Bonus/Commission/Overtime/Shift Allowance 0-100%
Pension Income Usually 100%
Bursary/Grant 0-100%
Stipend 0-100%
State Benefits (Child benefit/Tax credits etc.) 0-100%
Overseas income (e.g. earned in dollars / euros / yen etc) 0-100%

Evidencing bonus income for a mortgage application

Bonuses are a good example. Some borrowers will have annual or monthly bonuses that could count as qualifying income for a mortgage.

Different lenders take different approaches when it comes to bonuses and similar forms of extra income, such as regular overtime and commission. Some lenders are happy to accept bonuses, others refuse to take them into account.

Of the lenders who will take a bonus into consideration, many will accept 50% of the bonus. There are a handful who are a little more generous too, and a minority who may offer you a mortgage based on 100% of your regular bonuses and your basic salary.

Do benefits count toward a mortgage application?

As you can see from the table above, most lenders are happy to consider some types of benefits when assessing income.

The benefits that are accepted vary considerably, though there are lenders out there who will take the following into account and allow borrowers to use them to supplement their mortgage application…

  • Child tax credit
  • Working tax credit
  • Child benefit
  • Disability Living Allowance (DLA)
  • Industrial Injuries Benefit (IIB)
  • Incapacity benefit (IB)
  • Attendance Allowance
  • Pension Credit
  • Maternity Allowance
  • Severe Disablement Allowance
  • Widow’s Pension
  • Carer’s Allowance

There may be caveats attached for borrowers who are planning to use some of the above in conjunction with a mortgage application. See below for examples.

Evidencing child maintenance for mortgage applications

Where child maintenance is considered, most lenders want to see a court order as evidence of the payment.

However, there are some that can consider if the payment is non-court order, so long as the payments have been received and show in full in the bank account, for a period of time that indicates it’s likely to be sustainable and reliable going forward.

Evidencing benefit income for mortgage applications

Most benefits, if they are to be considered, need to be showing as regular payments on the bank statements, as well as having the full schedule of payment from the authority making payment. This, if a means-tested benefit, must also display that the calculation has been made correctly in line with the applicant’s earned income.

For example, say an applicant gets child tax credit and on their statement the “earned income” shows as £10k a year as the basis for the assessment. However, the applicant is applying with £20k a year income, which either indicates fraud, or that the income has only recently been received.

If the income only has been recently received, then the benefit income may well get recalculated and reduce – it cannot be used to supplement income on the application until the updated payment schedule is available to support the application.

What proof of income do I need as a contractor?

If you are a contractor, lenders looking for proof of earnings for a mortgage may ask for a copy of your work contact, documenting how much you’re being paid.

The line of work you’re in will also play a part. Some professions operate primarily on contracts and therefore the likelihood of having continuous employment is higher. Others may employ contract workers for short seasons only. Lenders in these instances will be concerned you’ll be out of work within a matter of weeks and, as such, may deem you as too risky.

For contractors to evidence income for a mortgage then, many lenders want to see a longer history of working and that income is sustainable and will be reliable going forward. They do this by requiring a minimum time with continued income, which for many lenders is 2 years, although there are some specialists happy to consider 12 months, and a handful happy to consider contractors that have worked for less than this, in the right circumstances.

The evidence required is often the contract itself, to check the details of when it started, when it’s set to end, and the terms for payment (i.e. on day-rate or project basis), as well as the corresponding customer bank statements, to check that the money has actually been paid.

I’m self-employed. How can I prove my income?

There are a few ways you can prove your income as a self-employed individual, including:

  • Payslips, P60s, employer references
  • Benefit and/or pension statements
  • SA302 tax returns – self-employed accounts

Some lenders – especially the larger providers – will want to see evidence of your accounts going back three years or even more. However, if you’ve been self-employed for a shorter time, there are lenders who can accept accounts going back only one year. See our mortgages for self-employed for more information.

I own a business. How can I prove my income?

If you run a limited company, it can be a bit more complicated. Some lenders will only take into account the salary you have paid yourself from the company when assessing affordability. Others will consider any dividends taken or profits made.

The experts we work with will be able to identify the right lender for your circumstances and the structure of your company. Get in touch and they will search the whole of the market for the best deals and connect you with the best provider.

Evidencing income for a mortgage if you are paid by umbrella company

Some contractors opt to work under an umbrella company to avoid the rigmarole of maintaining a payroll, chasing late invoices and dealing with the taxman.

There are a number of benefits to operating this way, and chief among them is the fact your umbrella company can provide a more traditional history of your earnings to a mortgage provider. Contractors who run their own accounts might not have proof of their income until the end of a tax year, but with umbrella workers, this shouldn’t be an issue.

Umbrella company employees receive regular (weekly or monthly) remittance slips, which some lenders might accept as income evidence in the absence of tradition wage slips.

One thing to note, though, is that a specialist mortgage provider will likely be required if you work under an umbrella company. Some lenders might be unwilling to offer you a mortgage based on your full income, neglecting to take things like bonuses and commission into account, but there are specific lenders who offer umbrella company mortgages and products geared towards those who work through an umbrella company and the experts we work with know who they are.

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Can I get a mortgage without proof of income?

For a while it was entirely possible to get a mortgage with no proof of income in the UK. These mortgages were known as self-cert or self-certification mortgages. However, these products were banned following the credit crunch. However, it is still possible to get a self-certified buy-to-let mortgage from a small handful of lenders.

How do I prove my income for a buy-to-let?

Most UK lenders prefer you to have a minimum income (£25,000 is a common minimum requirement) if you’re applying for a buy-to-let mortgage. They’ll typically ask you to evidence it in the same way you would for a residential agreement.

A small minority of lenders may consider offering a buy-to-let mortgage with no proof of income under specific circumstances, such as when the borrower has other sources of capital, including an inheritance lump sum or redundancy package. Evidence of these funds either entering your account, or evidence that they’re on their way may be requested.

It may also be possible to obtain a buy to let mortgage with no PAYE income if you’re a professional landlord whose earnings come entirely for a property portfolio. In this case, you may be expected to provide accounts for your properties or a self-assessment tax return so the lender can carry out income verification for your mortgage application.

Speak to an expert on income proof for mortgages

If you like anything in this article or you’d like to know more, call us on 0808 189 2301 or make an enquiry.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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