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Using Commission, Bonus and Overtime Income for Mortgages

We work with expert brokers who specialise in mortgages with different forms of income. Get started or read our guide below

No impact on credit score

Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: September 3, 2021

If you receive a large portion of your income through commission, bonuses or overtime, you may have struggled to get a mortgage in the past, with high street lenders seeing your income as unpredictable.

Thankfully, we work with advisors who are specialists when it comes to getting a mortgage with commission, bonuses and overtime as salary, So if you want to get the right advice and the best mortgage for you, make an enquiry!

Can you get a mortgage based on commission income?

Yes! Every lender is different: if you’ve been turned down for a commission only income mortgage, don’t panic, it doesn’t mean there aren’t good lenders with great rates available – you just need to know where to look for them!

This is where a mortgage broker comes in – there are brokers in our network who specialise in customers with complex income, and they know exactly which mortgage lenders to approach for a commission-based mortgage.

How mortgage lenders treat bonus or commission income

If you work in sales, it’s likely you’ll earn a basic salary, and then receive commission or bonuses dependant on how many sales you close. Other professions are incentivised based on productivity and some businesses pay bonuses or commission based on certain Key Performance Indicators (KPIs).

Whatever the role or sector, there are several key considerations lenders to make when establishing what you can borrow, as illustrated below.

How consistent do my commission payments need to be?

As we’ve already established, lenders will view your bonus and commission income differently…

  • Some will only accept monthly payments.
  • Some will only accept monthly or quarterly payments.
  • Whereas others will accept annual.
  • Some won’t accept weekly commission payments and others do.
  • And some will look at commission income whenever it is paid to you so long as you can evidence it is regular enough to budget and afford repayments.

For some people, the commission or bonuses may be of a similar amount each time, whereas for others, it can be volatile – some months earning hundreds, and others hardly anything (whilst still taking home a basic salary).

However, for people who earn commission and bonuses on top of their basic salary, lenders can be concerned about how they’ll be able to consistently make mortgage repayments if targets are missed and this additional income is not made, given that it’s not guaranteed.

Getting a mortgage if your commission is more than your basic wage

Some lenders will cap the amount of commission income they consider to only 100% of your basic salary. This can mean, for someone highly incentivised with most of their income coming from commission (many salespeople), that they are limited to what they can borrow from some lenders. Thankfully there are providers happy to consider the full, earned income regardless of whether this is from basic or commission, and irrespective of the ratio between the two.

For instance:

A borrower with a basic salary of 15k and annual commission of 30k, can be offered very different maximum loan amount, even if they offer the same generosity for lending and affordability (at say, 5x income):

Income Considered Maximum Loan Amount
Lender A caps commission to basic 15k + 15k = 30k 30 x 5 = 150k max loan
Lender B accepts all income 15k + 30k = 45k 45 x 5 = 225k max loan

How long do I need to have been earning commission for?

Many lenders require commission to have been earned for at least 2-3 years before they will consider it, some are happy if commission is evidenced as a regular payment, over a 12-month period, and a minority can consider it after just a few months.

Bear in mind that certain lenders will calculate the commission income as an average over the 2 years, so if income is greater today than it was last year, this can reduce the amount that lender will consider.

Similarly, if income has reduced recently, then lenders are likely to cap the amount they consider lending, to the current month or recent history.

Example:

The following applicant may get very different lending amounts depending on the lender they approach.

Latest year basic income 15k + commission of 30k. Quarter 1 Commission = 10k, Quarter 2 commission = 5k. Quarter 3 commission = 10k. Quarter 4 commission 5k.

Previous year basic income 15k + commission of 20k, paid quarterly 5k each Q.

All lenders lending at 5x income, would result in:

Income Considered Maximum Loan Amount
Lender A considers 100% of income ave over 2 years Basic 15k + commission of 25k = 40k 200k
Lender B considers 100% income ave over 12 months Basic 15k + 30k commission = 45k 225k
Lender C considers income from most recent Quarter, annualised 15k + 20k = 35k 175k

What amount of my commission income will mortgage lenders accept?

Some lenders don’t consider any commission income, others will only consider 50%, and a few can consider up to 100% in the right circumstances.

Example:

For applicant earning 15k basic, with 30k commission can be treated very differently and offered a wide range of maximum loan amounts lender to lender, assuming each in this example lend 5x income.

Income Considered Maximum Loan Amount
Lender A considers no commission 15k basic + 0 commission 15 x 5 = 75k
Lender B considers 50% commission 15k basic + 15k 30 x 5 = 150k
Lender C considers 100% commission 15k basic + 30k 45 x 5 = 225k

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Getting a mortgage with a 100% commission-based job

This can be more difficult due to there being fewer approachable lenders, but as we’ve already covered, there are mortgage providers who accept your entire evidenced income, irrespective of source. If you can fully evidence your income, one of these flexible lenders might have a high enough appetite for risk to offer you a mortgage based on 100% commission.

To find the right lender in a niche scenario like this, you should speak to a mortgage broker who specialises in customers with complex income. They will know exactly which lenders to approach for a 100% commission-based mortgage and can introduce you to the right one, first time.

Lender affordability for commission income mortgages

The other thing to take into account is the generosity of the lenders in their general affordability calculations with regards to your commission or bonus income and the mortgage.

Where some lenders will only be willing to lend three times your salary, others may be able to stretch to four or five times the amount… and a few lenders are even known to stretch to six times, under the right circumstances.

Of course, you shouldn’t accept a loan that you can’t afford to repay. However, depending on how much deposit you have, you may not need to borrow as much, which can make it easier when getting a mortgage with commission income.

Can you get a mortgage that includes bonus income?

Yes. How lenders and underwriters calculate bonus income for mortgage applications is often similar to the way they deal with commission, so the above sections for commission income are usually true of bonuses.

For example…

  • Will how long you have been earning your bonus impact the mortgage application? (yes, this works in the same manner as for commissions, where some lenders will insist on 2-3 years, others 12 months, and a minority just a few months).
  • How consistent do bonus payments need to be for mortgage applications? (This is the same as commissions also, where many lenders consider annual bonus mortgage applicants, some will consider quarterly and monthly bonuses, and a few can consider monthly and weekly bonuses).
  • Getting a mortgage if your bonus income is more than your basic wage (in the same way as commissions, some lenders will cap lending to basic salary).
  • What amount of my bonus income can I include in a mortgage application? (some lenders will accept 0%, some will be happy considering up to 50%, and a handful up to 100%).
  • Lender affordability for guaranteed bonus mortgages (of course, general affordability calculations apply, where some lenders will, once they have established a borrower’s income they then cap lending to different multiples of that income, some maximums are 3x the income, others 4, a few lenders consider 5x income, and a handful can even go up to 6x in the right circumstances).

It is important to note that bonuses are often paid differently by employers and are considered by some as being more reliable. There is also typically less weight to the bonus vs. the salary, and people earning bonus income tend to have higher basic wages and are paid smaller bonuses.

Although there are many similarities between bonus and commission income in the eyes of many lenders, keep in mind that some will often assess them in different ways, so we would always recommend speaking to a specialist to get accurate advice on using bonus income for mortgages beforehand. Make an enquiry and the brokers we work with will be more than happy to discuss your case over the phone.

How to evidencing commission and bonus income on a mortgage application

If your plan is to secure a mortgage using bonus income to boost your qualification prospects, the lender will request proof that you’re earning this extra capital. Generally speaking, most providers will want to see…

  • Your last three payslips with bonus and commission clearly evident.
  • Your most recent P60

This might vary if you have any bad credit against your name (as previously mentioned), as some providers may request 12 months’ worth of wage slips due to the higher risk involved.

Is overtime any different to commission and bonus income?

From a mortgage lender’s perspective, it’s not really much different. Only a small number of mortgage providers won’t let you declare any of your overtime at all, while some will accept a capped percentage of it, and others 100%, as long as you can evidence your overtime payments to their satisfaction.

The kind of proof a lender might ask you for includes…

  • Your latest 3 months’ payslips with overtime included on them
  • The past years’ P60/HMRC Annual Tax Year Overview
  • Your latest bank statement
  • A confirmation letter from your employer

One distinction that some lenders make with overtime is between guaranteed and non-guaranteed. If you can evidence that your overtime is set in stone as an integral part of your job, you might stand a better chance of finding a lender who’s willing to let you declare 100% of it. For non-guaranteed overtime that is sporadic, some lenders might only let you declare an average figure or a capped percentage.

Speak to an expert

Speaking to a mortgage broker is recommended if you’re applying for a mortgage and want to declare commission, bonus or overtime income. They can make sure your supplemental income goes furthest by introducing you to a lender who accepts the highest percentage of your total income possible, and is best positioned to offer a favourable interest rate to you.

We offer a free broker-matching service that can pair you up with a mortgage advisor who specialises in customers with complex income. They could save you time, money and potential disappointment in the long run by introducing you to the right lender, first time, and offering you bespoke guidance throughout your application.

Call us today on 0808 189 2301 or make an enquiry here and we’ll arrange a free, no-obligation chat between you and a mortgage broker who deals with bonus and commission income every day.

FAQs

Can I get a mortgage with commission/bonus income AND bad credit?

Yes, it’s possible but your choice of lenders will be slimmer if you fall into two niche categories, in this instance complex income and bad credit.

Thankfully there are specialist providers out there who deal with borrowers with all kinds of bad credit every day. If this happens to be you, don’t panic. These issues aren’t as big a deal to some lenders as they are to others, and with whole-of-market access, it may be possible to find one who’s happy to offer mortgages with bad credit and complex income.

Often these specialist providers base their lending decision on the type of adverse credit you have. For instance, a missed phone bill payment is less severe than a recent bankruptcy, and how long the credit issue has been on your file will also be taken on board.

If you have poor credit, some lenders may ask you to provide additional wage slips to evidence your commission/bonus income (12 months’ worth, rather than the standard three) due to the extra risk they’d be taking on by offering you a mortgage.

Will the property type impact my application?

Potentially. If you’re looking for a mortgage provider who takes bonus and/or commission income into account, your chances may be somewhat thinner on the ground if the building you’ve got your eye on is a non-standard construction property, and this usually refers to anything that isn’t made of bricks and mortar. For example…

  • Timber framed houses
  • Properties with thatched roofs
  • Modular buildings
  • Steel framed properties

If you have both complex income and are in the market for a non-standard construction property, you belong to two niche groups, so the number of lenders you can turn to is fewer. Help is at hand, though, as the whole-of-market advisors we work with can identify the lenders who specialise in both niches and can offer the best deals to customers in your circumstances. Make an enquiry and a broker will connect you to the right provider.

Can I get a buy to let mortgage with bonus/commission income?

Yes, although some lenders may impose their own caveats on buy to let borrowers who are planning on using bonus income to help them qualify for a mortgage product.

For instance…

  • Clean credit: Some BTL lenders may insist on this, but at others it’s less of an issue.
  • Experience as a landlord: Again, certain buy to let lenders prefer customers who have experience as a landlord (though some place restrictions on portfolio size), but there a minority who will even cater for borrowers who have never even owned a property before, as long as their income is adequate.
  • Income requirements: Certain lenders will impose a minimum salary requirement on BTL borrowers (around £25,000 per year is common) but others are more concerned with the viability of the investment. I.e. whether the forecast rental income of the property you’re hoping to buy will cover the mortgage.
  • Age limits: Some lenders won’t offer buy to let mortgages to customers over 75, non-standard income or otherwise. Others draw the line at 85, but there are also providers who will impose no upper age limit, as long as the borrower can prove they can repay the mortgage post-retirement.
  • Other factors: The are a number of other factors which affect BTL mortgage eligibility. If you’re planning to run the property as an HMO, for instance, a specialist lender will be required. Consult our dedicated page on buy to let mortgages for more information.

The bottom line for borrowers with bonus or commission-supplemented income who are seeking a buy to let mortgage is that specialist advice should be sought, as they fall into more than one niche category.

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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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