Getting a Mortgage With Bonus and Commission Income
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In this article, we explain all you need to know about getting a mortgage with bonus and commission income, including how to evidence it on your application and why using a mortgage broker is the smart way of securing the lending you need.
Can you get a mortgage based on bonus or commission income?
Yes, it’s possible. Most lenders will let you put bonus or commission income towards your mortgage although not all of them will allow 100% of this type of income to be counted towards your overall earnings figure (see lending criteria section below for more details). Whether you’re approved or not will depend on various factors such as how regularly you receive additional income and the total amount you receive.
If, for example, the majority of your income comes from bonuses or commissions, you may find getting approved for a mortgage hard.
However, if you earn a similar amount in bonus and commission income each month, on top of your base salary, you’ll typically be viewed more favourably. Lenders will still carry out a thorough affordability assessment to make sure you’d be able to afford your mortgage repayments if you missed your targets and didn’t receive any additional income for a period of time.
What about overtime?
Again, most lenders are happy to consider overtime income when carrying out affordability assessments. However, they’ll base their lending decision on how much overtime income you receive, how often you receive it, and whether overtime is guaranteed in your line of work or not.
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Lending criteria for these income types
There are a few lenders who won’t accept any bonus or commission income at all. Some others cap the amount an applicant can include in their application, for example, at 50% or 60%. Others will accept 100% commission or bonus income.
Lenders need as much assurance as possible that borrowers will be able to meet their monthly repayments and this isn’t always easy to determine when an applicant has non-standard, and possibly fluctuating income.
While each lender will have its own set of lending criteria, they’ll typically look at:
How much of your total earnings is made up of commission/bonus income
If all or most of your earnings come from commissions or bonuses, you may find getting accepted for a mortgage tricky because lenders will be concerned about your non-consistent and fluctuating income. They’ll worry that a missed target may impact your ability to pay your mortgage. However, that’s not to say you can’t get a mortgage. You may just have to use a specialist lender.
If your commission or bonus income makes up just a small part of your overall earnings, you should find getting approved more straightforward (as long as you meet all other lending criteria).
How often you receive additional income
Lenders will want to know how regularly you receive your commission or bonus income.
Some will only accept annual payments, while others will accept monthly or quarterly payments. The rationale here is that you should be able to budget better if the payments are consistent and you know when you’ll be receiving the additional income.
The length of time you’ve been earning commission/bonus income
Some lenders will require you to have earned commission or bonus income for 2-3 years before they’ll consider it. However, others will accept 12 months if you can prove the payments are regular and consistent.
It’s worth noting that some lenders will calculate your commission or bonus income as an average over a 2-year period. So if you earned more additional income in year 1 and less in year 2, this could reduce the overall amount they’ll consider.
Whether your additional income is contractually guaranteed or not
This is particularly relevant to overtime. Some professions guarantee a certain amount of overtime. If this is the case and you can prove it, you may be viewed more favourably by lenders.
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How to get a mortgage based on bonus or commission income
Here’s a summary of the steps you need to take if you’re applying for a mortgage with bonus or commission income.
Step One: Speak to a broker
For mortgage applicants using bonus or commission income, seeking advice from a broker can make a real difference from both a cost and efficiency point of view.
Experienced brokers who specialise in this niche will know exactly which lenders accept supplemental income and how much they’re willing to accept, which will save you both the stress and expense of wasted applications.
They’ll also be able to find you the best deal for your circumstances, get access to exclusive rates often not available to the general public, and guide you through the application, making sure you have all necessary documentation.
We have brokers in our network with years’ of experience helping applicants using bonus or commission income get approved for a mortgage. Get in touch and we’ll match you with an expert today.
Step Two: Ask your employer for a confirmation letter
Lenders may also request a letter from your employer confirming your bonus or commission structure and possibly a forecast of what you should expect to receive. Turnaround time for these types of letters can be long so it’s best to get your request in early on in the process.
Step Three: Get your documents in order
If you’re going to include bonus or commission income in your application, lenders will require proof of how much you receive and how regularly you receive it. That means you’ll need to have all up-to-date paperwork readily available including payslips, bank statements and the past year’s P60. Not having the relevant documentation ready to go could slow down the application process and could even harm your chances of getting approved.
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Which lenders let you declare this income?
A large number of mainstream and specialist lenders let you declare bonus, commission and overtime income.
These include big names such as Nationwide, Natwest and HSBC, as well as specialist lenders such as Bluestone, Together and Vida Home Loans, and challengers like Virgin Money and Aldermore.
Remember, all lenders have their own individual criteria, which can change at any time. A broker is best placed to advise which is best for your circumstances.
How to prove bonus and commission income on your application
As mentioned above, lenders will ask for proof of any bonus or commission income. This will typically be in the form of your recent payslips, bank statements or your latest P60. They may also request a letter of confirmation from your employer verifying the bonus or commission structure you’re on and when you’re due to receive your additional income.
Get matched with the right mortgage broker
Getting a mortgage using bonus, commission or overtime income can be tricky. However, you can boost your chances of getting approved and finding a competitive deal by speaking to an experienced broker.
Our broker matching service can connect you with an expert who specialises in this area.
Give us a call on 0808 189 2301 or make an enquiry and get matched with a broker for a free initial conversation.
Speak to an expert
Maximise your chance of approval with a dedicated specialist broker
In theory, it’s possible. But you’ll probably have to use a specialist lender and will need to be able to prove your commission is regular and consistent.
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