Income types and mortgages

What income types can you use to get a mortgage in the UK?

There are many ways to earn a living, but not all of them will be accepted by every mortgage provider.

We will examine the different income streams that may not be viable for a mortgage and discuss your prospects if this is how you make your living.

We’ll also discuss mortgages for people dependent on benefits and other topics. Start your mortgage journey online now below:

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What kinds of income can mortgage lenders accept?

For mortgage lenders, the main criteria is that income must be both sustainable over the loan’s life and sufficient to pay mortgage payments. This could include salaries and wages, bonuses and commissions, shares, dividends, and other income.

Professional mortgage advice is highly recommended if your income is classified as ‘nonstandard’ or complex. This will decrease your chances of getting a mortgage declined or offered a less favourable deal.

These are just a few examples of non-standard income.

• Fixed income
• Variable income
• Income from Limited Liability Partnerships
• Trust income
• Apprenticeship salary
• Trainees get paid
• Income from bursaries
• Dividends can be used as an income source
• Benefits
• Other income from self-employment
• A new job can lead to higher wages
• Zero-hour contracts
• Part-time
• Temp workers

What your job means for getting a mortgage

Your mortgage prospects will be affected by how you spend your money. Some lenders specialise in customers who trade in specific ways, while others do not.

A mortgage broker can assist you if you are self-employed, have complex incomes, or cannot pay your bills on time.

Continue reading to learn how your job type could impact your mortgage options, or click the link below to speak with a mortgage broker.

 

Self-Employed

Self-employed people have the most options for how they get paid. These include freelancers with multiple clients, contractors working with one client, gig workers and business owners. Our complete guide to self-employed mortgages will cover all aspects of self-employed incomes.

For professionals

This includes teachers, doctors, architects, senior civil officials, military personnel, nurses, and others. As they progress in their careers, their pay can rise significantly. When considering mortgage applications, some lenders might consider future earnings.

New job

Before considering a mortgage application, most lenders require a minimum of 3 months of payslips. Some lenders will accept shorter work hours, while others may require a contract of employment. For more information on how to get a mortgage for a job start, see our separate guide.

Zero-hour contract

More people are using zero-hour contracts than ever. Many people believe they can fulfill financial obligations such as a mortgage. However, automated processes used by many lenders don’t consider this. We know of a few lenders that will accept zero-hour contracts.

Part-time

Lenders care more about your ability to repay the loan than how many hours are worked. Lenders will not have a problem providing a mortgage if you have sufficient income and a deposit.

Temp workers

Lenders need to know that you can afford your monthly payments over the loan term. Some lenders are comfortable with certain types, such as IT workers and doctors. All lenders are different, so each mortgage application will be considered individually.

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Fixed-income mortgages

Fixed income can be used to cover a variety of situations, including pensions. Many are acceptable risks for lenders.

Securities are another type of investment. The issuing company must pay the recipient a set amount on a specific date.

Others include:

• Bonds
• Lender Stocks
• Government bonds
• Fixed Interest Securities
• Disability Pensions

Several mortgage providers will consider applications from individuals on fixed incomes. Whether you are eligible for a fixed-income mortgage is dependent on many factors.

• Your income level
• How much money do you want to borrow
• What amount of deposit you have
• Your credit history

If you are receiving disability benefits, there is good news: There are lenders that will accept income from your disability benefits when you apply for a fixed-income mortgage.

Some lenders will limit the number of benefits you get to be eligible for lending. This will reduce the risk of losing your earned and benefit income. Our team works with experts in this field and will work with them to get the best deal.

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Variable income mortgages

Variable income can be used to cover many different jobs and professions. This includes those with low income and high commission (which may consist of those in the automotive industry for example) and those who work zero hours or are freelance contractors earning variable hourly rates. Lenders will consider your entire application and assess your income records to determine if you meet the mortgage criteria.

What income is required to get a mortgage?

Ask our mortgage brokers about a no-income mortgage. Although few mortgage lenders approve a mortgage without income, there are exceptions.

It could be that you are an experienced landlord or someone with high net worth but no income. You will need substantial cash reserves to prove that you can service the loan until you find a job or another income stream.

Every UK mortgage lender must ensure the borrower can afford the loan.

However, some lenders are more flexible when it comes to acceptable types.

• If you are self-employed and don’t have a track record in trading but can show future earnings and have an accountant willing to write a projection, they might consider your application.
• A nice, juicy contract might be the best option if you are looking to change jobs in the future.
• Some lenders will accept your share of the profits if you have a business with profits but not enough to make withdrawals.

Various reasons could lead to someone wanting a mortgage without current income. Many lenders will be happy to examine justifications on a case-by-case basis.

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Mortgages for Limited Liability Partnerships

A Limited Liability Partnership is the simplest form of a Limited Liability Partnership. An LLP allows you to join a partnership without risking your assets.

An LLP does not pay corporate tax. Instead, each member is treated as self-employed (many law firms and accounting firms are set up as LLPs). Members will need to prove income as any other self-employed individual.

Many lenders will need three years of accounts. However, some lenders may only require one to two years and a few months less, depending on specific criteria. Lenders who also arrange BTL through a Limited Company usually offer buy-to-let mortgages for LLP.

The lending criteria are almost identical in most cases. Our team works with specialists who can help you locate a lender that will accept LLP mortgagees, including remortgages or ‘buy-to-let’ mortgages for LLPs.

Trust income mortgages

Trusts are usually established to manage investments, money and property. First, you should check if it has the authority for trust fund income mortgage borrowing. This is not always true.

A trust income mortgage can be a great way to get your child on the property ladder. It could also save you a lot in long-term rent. You can avoid inheritance and capital gains taxes using a trust income mortgage. It is a wise financial decision for everyone.

A trustee will be needed to manage the trust and income from the mortgage. What is a mortgage trustee? The mortgage trustee is someone who manages the trust for the benefit and on behalf of another person.

Trusts are a common source of distrust for lenders (if you will pardon the pun). This is because trust income can be used to qualify for a mortgage. It is also common for someone to act in the role of guarantor.

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Is it acceptable to receive income from a trust for obtaining a mortgage?

The short answer to that question is yes. A regular income stream from a trust can be used to qualify for a mortgage. Lenders will accept 100% of the income from trust funds.

The usual criteria will apply. You may also be required to submit tax returns of up to three years. Your income, ability and history of credit, as well as your ability to pay a mortgage, will all be considered.

Trust income mortgages are a very specific area. We can help you to get positive results by referring you to one of our advisors.

Are you able to get a mortgage for your apprentice job?

It is possible but can be challenging without professional advice. Apprentices are often given low salaries because the employer sees them more as an asset than a productive employee.

Many lenders might approve you or your child for a mortgage to finance an apprenticeship.

• Basic salary or wage (some lenders require a minimum).
• Overtime/bonus paid (some lenders accept 100%, others limit the amount used)
• Are you likely to be offered permanent employment? Lenders will be more concerned if there is no guarantee.
• How much do you want to borrow? (Is your income sufficient to pay off the loan)
• What amount of deposit do you have? You’ll need at least 5% if you have bad credit.
• If your family is willing to help financially, there are many options. They can either deposit their money or use their income as guarantors.

Mortgage providers may also consider trainees, but they will tend to examine each case individually. If you’re an apprentice, how can I get a mortgage?

It is best to contact a mortgage broker by clicking the link below.

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Not just any advisor, but one who is a specialist in this field. This could make the difference between getting a loan as an apprentice and not.

 

A bursary can help you get a mortgage.

An NHS bursary is a monthly payment to students. It is used to pay tuition fees and living expenses. These payments are free from income tax and national insurance payments. This means that all payments are available except for specific private bursaries.

Many lenders have different criteria to review each NHS bursary mortgage request individually.

These factors would be considered:

• Annual bursary amount (some lenders accept minimum incomes).
• You may be eligible for Disabled Student Allowance, which can assist with affordability.
• Part-time work that generates additional income (as mentioned above).
• Is it likely that you will find employment after the bursary training period is over? If not, lenders may be less likely to approve you.
• What amount of deposit do you have?
• If your parents are willing and able to financially assist you (either deposit or repayments as a guarantor or joint owners).

We believe you should not be disenfranchised as an NHS worker. Therefore, we will connect you with one of our top advisors who will do everything possible to help you get the best mortgage.

 

Use dividend income to apply for a mortgage.

Many directors and business owners take a low salary and then supplement it with dividends. If you’re wondering if dividend income can be used to get a mortgage, the short answer is “yes”.

The usual affordability criteria apply to a dividends mortgage application. By clicking the link, you can learn more about mortgages based on dividend income and using retained profits to apply for a mortgage from our market financial advisers.

Some lenders will consider retained profits if you are a business owner. This means that you might be able to borrow more than you think.

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Benefits mortgages

It is possible to obtain a mortgage using benefits. However, this will depend on your financial situation, whether you meet the mortgage lender’s criteria, and if the repayments are affordable.

The mortgage providers will also examine how much income you get from benefits and what percentage of your total income is from retirement.

Many mortgage lenders will accept benefits from the government and may consider these benefits:

• Credit for child tax
• Credits for working tax
• Child benefits
• Disability Living Allowance (DLA).
• Industrial Injuries Benefit (IIB).
• Incapacity benefit (IB).
• Attendance Allowance
• Pension Credits
• Maternity Allowance
• Severe Disablement Allowance
• Widow’s pension
• Carer’s Allowance.

Some lenders won’t accept employer or state benefits income when assessing your mortgage application.

Match with an expert mortgage broker today

Professional advice is essential if you are applying for a mortgage that requires a complex or non-standard income. Click the link below, to begin with a mortgage advisor regulated by the Financial Conduct Authority.

We will find a lender that understands your financial situation and can help you get approved for a mortgage.

Begin your mortgage journey here:

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FAQs

If you are eligible for benefits, can you get mortgage help?

Although you may not be able to apply for a mortgage to purchase a house, you might be eligible to receive assistance with mortgage interest.

What is the acceptable amount of benefit income?

A few lenders will accept income from pensions and Disability Living Allowance (DLA) to service your mortgage. Additional benefits could count towards your overall income, depending on the lender.

What about unemployment benefits?

Some lenders will accept applications from people eligible for certain types of benefits. Ask one of our advisors who are experts in this field.

Can child support be used as income to get a mortgage?

Although many lenders won’t consider child support income, some will.

Is maintenance considered income when you apply for a mortgage

Some lenders will accept as much as 100% of the maintenance income. The lender will decide. You must have a history of maintenance payments or a court order to pay them.

Lenders will also consider the age of the children. Some lenders won’t lend to children under certain ages to ensure that the benefits last for a reasonable time.

Is it possible to get a mortgage if you are receiving disability benefits?

Many lenders consider the Disability Living Allowance (DLA) income when granting mortgages. You will need to meet the usual criteria. Lenders cannot deny you a mortgage if you do not meet these conditions.

Are tax credits considered income when you apply for a mortgage

Some lenders won’t accept tax credits, but some will. A few lenders will accept 100% of the credit towards income. Others may limit it to 60%.

What mortgage lenders will accept tax credit?

Some lenders will accept tax credits as income to finance a mortgage. To support your claim, you must submit bank statements and letters from the relevant government agency. Talk to our mortgage advice bureau about your options, and they will find the best mortgage lender for you regarding mortgage tax credits.

Can I get a mortgage without income verification?

It is difficult for self-employed or contract workers to get a mortgage without income proof. Although the days of self-assessment are over, there are still lenders that will consider your application.

Many can borrow money now, whether self-employed, contractors or temporary workers. For professional gamblers, there are mortgages.

Are gig workers eligible for a mortgage?

Working in the gig economy can be challenging, also known as contract or freelance work. However, the advisors that we work with specialise in and understand this type. Gig worker mortgages are available. The lenders will only need to see your accounts and consistent contracts.

Can I get a mortgage if I have a low income or receive benefits?

Many lenders will consider all types of benefits, and if you have earned income from self-employment or employment, there may be lenders who will lend to you.

Can I get a mortgage in the UK based on my overseas income?

Yes, it is possible. However, you will most likely need a specialist lender to approve a complex application such as this. Lenders will consider applicants whose principal earnings are in US dollars, Euros, Australian dollars or other currencies.

Are shares considered income when you apply for a mortgage?

Yes. As long as you have documentation to support their value and legally hold them, mortgage lenders may allow you to declare stocks, shares, and other investments as income.

Can tax credits be used to pay a mortgage loan?

Yes. Some lenders consider child tax credit, child benefit, and working tax credit income. However, in most cases, you will likely need additional income sources to be approved for a mortgage.

Keep any correspondence you receive from the tax office about your tax credits. The lender might request them to prove your income.

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