Commission and bonuses for mortgages

This guide gives you everything you need to know to get a mortgage when you are generating commission and bonuses, which lenders to use and what steps you should take next

High street lenders may be unable to lend you a mortgage if you earn a lot of income from overtime, commissions, bonuses, or other forms of income; they may want to see your annual income. This is because they need to be sure you can make the mortgage repayments.

The good news: our mortgage brokers can help you. We have a few mortgage providers who will consider commission and bonuses alongside your basic salary and annual income.

We can help you get approved for a mortgage if you are on commission or bonuses, start below now for free advice:

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Is it possible to get a mortgage based on commission income?

Yes, commission income mortgages are available.

Each mortgage lender is different, so if you have been denied a commission-only income mortgage, don’t panic.

Our mortgage brokers have access to great lenders with great rates who will include a monthly commission, you just need to know where they are!

A mortgage broker is a professional who specialises in complex income customers and knows the best mortgage lenders to contact for a commission-based loan.

Click the link below to speak with one of our brokers who can help with your commission or bonus mortgage requirements:

 

How mortgage lenders deal with bonus or commission income

Sales jobs will likely pay a basic salary and commissions or bonuses depending on the number of sales closed. Other professions are also incentivised based on productivity.

Some businesses pay commissions or bonuses based on specific Key Performance Indicators (KPI’s).

No matter what your role is, there are vital considerations that lenders should make when determining how much you can borrow.

What consistency do I need for my commission payments?

We’ve established that lenders may view your commission and bonus income differently…

• Some people will accept only monthly payments.
• Some people will accept only monthly or quarterly payments.
• Others will accept an annual income.
• Some people won’t accept weekly payments of commission, while others will.
• Some will consider commission income as income if it is received, provided you can prove that it is consistent enough to allow you to budget and pay back.

Some people may receive similar commissions or bonuses each month, while others can earn hundreds or just a few pounds (while still earning a basic salary).

Lenders can be worried about people who are paid commissions and bonuses in addition to their base salary.

You may be unable to make regular repayments on your mortgage if you miss targets or if these extra payments aren’t made.

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You may be eligible for a mortgage if your commission is more significant than your basic wages.

Lenders will limit the commission income they accept to less than 100% of your base salary.

For someone who is highly motivated and receives most of their income from commission (many salespeople), this can limit the amount they can borrow from lenders.

Some providers are happy to accept any earned income, whether it’s basic or commission, regardless of how it is paid.

Take, for example the below:

A borrower earning a minimum salary of 15k with an annual commission of 30k can receive a very different maximum loan amount even though they have the same willingness to lend and affordability criteria.

What length of time do I have to be earning commission?

Lenders require that commission be earned for at least two years before considering it. Some lenders are happy to accept a commission as a regular payment over 12 months. A few can take it in a few months.

Keep in mind that some lenders will use an average of two years to calculate commission income. If income is higher today than last year, it can affect the amount the lender will consider.

Lenders may also limit lending if income has decreased in recent months. This applies to either the current month or the past.

See the below example:

The next applicant could get very different lending amounts depending on their approach.

Last year’s basic income = £15,000 plus a commission of £30,000. Quarter 1 Commission = £10,000, Quarter 2 commission = £5,000. Quarter 3 commission = £10,000. Quarter 4 commission £5,000.

Basic income last year £15,000 + commission £20,000, paid quarterly £5,000 every quarter.

What percentage of my income from the commission will mortgage lenders accept?

Some lenders won’t consider commission income.

Others will consider only 50%, and a few lenders can take 100% if the circumstances are right.

Example:

An applicant making 15k can have a 30k commission. This allows them to be treated differently.

They can borrow as much as they want up to a certain amount, provided each lender lends 5x their income.

Get a mortgage with a 100% commission-based position

Although this can be difficult because there are fewer lenders to choose from, mortgage providers will still accept all evidenced income regardless of source.

These flexible lenders may be able to approve you for a mortgage on 100% commission if you can prove your income.

A mortgage broker specialising in complex income customers is the best way to find the right lender for you.

Our online mortgage advisor, who specialises in complex income, will be able to recommend the best lender for you.

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Lender affordability for mortgages with commission income

Another thing to consider is the generosity of lenders when calculating general affordability for your mortgage and commission income.

Some lenders won’t lend more than three times your salary, while others might be able to lend four to five times that amount and some lenders may even be willing to lend six times.

You shouldn’t take out a loan if you can not afford the repayments on your mortgage.

You may not need as much depending on the amount of your deposit, this can make it easier to get a mortgage with commission income.

Is it possible to get a mortgage with a bonus income?

Yes, you can get an income mortgage.

Take, for example…

• How long have you been earning your bonus? This works the same way as commissions. Some lenders insist on 2-3 years, while others require 12 months. A minority will only need a few months.
• What consistency do mortgage applicants need for their bonus payments? This is also true for commissions. Many lenders will consider annual bonuses to mortgage applicants. Some lenders will consider monthly, quarterly, and weekly bonuses.
• You can get a mortgage if you have a bonus income that is greater than your basic wages. Some lenders may limit lending to your basic salary, just like commissions.
• How much of my bonus income may I include with a mortgage application? Some lenders accept zero, while others consider up to 50%. A few will even consider 100%.
• Guaranteed bonus mortgages are available to some lenders (of course, the general affordability calculations still apply). Once a borrower has established their income, lenders then limit lending to various multiples of that income. Some lenders allow for a maximum of 3x, while others allow for 4x. A few lenders can lend up to 6x, depending on the circumstances.

It is important to remember that employers often pay bonuses differently, and some people consider them more reliable. Bonuses are often paid less than the salary. People who earn bonus income have higher basic wages but receive smaller bonuses.

While there are many similarities between the commission and bonus income, lenders will look at them differently.

We recommend that you speak to a specialist before using any bonus income on mortgages, you can do this by clicking the button below:

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How to evidence bonus income and commissions on a mortgage application

The lender will ask for proof of income if you plan to get a mortgage with bonus income. Most providers want to see…

• Your last three payslips included bonuses and commissions.
• The most recent P60

This could vary if your credit history is poor. Some providers may ask for 12 months’ worth of wage slips to cover the risk.

What is overtime like a bonus or commission?

It’s really not that different from a mortgage lender’s point of view.

A small percentage of mortgage lenders won’t allow you to declare overtime, but others will accept a certain amount and others 100%.

As long as they can verify your overtime payments, it is not really that different.

A lender may ask for proof that you include…

• The latest three months’ pay slips, including overtime.
• An overview of the past P60/HMRC annual tax year
• Your latest bank statement
• Confirmation letter from your employer

Some lenders distinguish between guaranteed overtime and non-guaranteed overtime. You might be able to show that overtime is an integral part of your job.

This will increase your chances of getting a lender, allowing you to declare 100%; some lenders won’t allow you to declare non-guaranteed overtime if it is irregular.

Talk to Loan Corp today to get approved for your mortgage

If you are applying for a mortgage and wish to declare any commissions, bonuses or overtime income, it is a good idea to speak to a broker.

Our mortgage broker can help you find a lender that will accept most of your income and offer you a favourable interest rate and the best mortgage deal on the market.

Each of our brokers is regulated by the FCA so click the link below to begin your journey to having a mortgage approved fast:

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FAQ

Can I get a mortgage if I have both bad and commission/bonus credit?

It is possible, but you will have a more challenging time finding lenders if your commission income is too high or your credit score is low.

Some specialists can help borrowers with bad credit. Don’t worry if this is you. These issues aren’t as important to some lenders as others.

With whole-of-market accessibility, it might be possible to find one who is willing to offer mortgages to borrowers with poor credit and complex income.

These specialist providers often base their lending decisions on your type of adverse credit. For example, a missed phone bill payment is less severe than a bankruptcy filing. It will also be considered how long your credit history has been.

Lenders may request additional wage slips if you have poor credit to prove your income. This is because they are taking on more risk by giving you a mortgage.

What will the property type have on my application?

You might not find a mortgage provider that considers a commission and bonus income if you are looking for a building with nonstandard construction. This usually means anything made of bricks or mortar. For example…

• Timber-framed houses
• Properties with thatched roofs
• Modular buildings
• Properties with steel frames

You can access fewer lenders if you have complex income and are looking for non-standard property.

 

Is it possible to get a mortgage buy-to-let with a bonus/commission income?

Yes. However, some lenders may restrict buy-to-let borrowers who plan to use bonus income to help qualify for a mortgage product.

Take, for example…

• Clear credit: While some BTL lenders might insist on it, others don’t care as much.

• Experience as a landlord: Since specific lenders will only lend to customers with landlord experience (though they may place limitations on portfolio size), a few will also consider borrowers without any previous property ownership.

• Income requirements Certain lenders will impose a minimum income requirement on BTL borrowers (around £27,500 per annum is the standard figure). Still, other lenders are more concerned about the viability of the investment. I.e. Whether the projected rental income for the property you are hoping to purchase will be sufficient to cover the mortgage.

• Age limits: Some lenders will not offer buy-to-let mortgages to customers who are over 75 or have a non-standard income. Others place the limit at 85. However, some providers will not impose an upper-age limit if the borrower can show they can repay the mortgage after retirement.

• Other factors: Many other factors can affect BTL mortgage eligibility, a specialist lender is required if you plan to operate the property as an HMO. For more information, visit our dedicated buy-to-let mortgages page.

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 specialist category.

Begin your journey by clicking the link below:

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