Does complex income, like a commission or bonus, make getting a mortgage more difficult? Here, we answer the common questions we hear from homebuyers to help you get started with your application.
Many homeowners earn more than just their base salary through commissions, bonuses, or performance-based pay. When applying for a mortgage, your broker will ask whether this applies to you, because whilst lenders can use this income as part of your affordability calculations, they treat it a little bit differently.
Can I get a mortgage with a commission or bonus income?
Yes, you can secure a mortgage with commission or bonuses as your income method. However, while many lenders consider this income, most will want to see a history of regular payments.
Why do lenders treat variable income differently from salaried income?
The main reason lenders can be wary about commission or bonus income is due to the risk of income fluctuations and the impact this could have on your ability to make your mortgage payments.
Lenders want to see evidence of stability and consistency to proceed with your application. If they feel you’re more dependent on company performance or market conditions, they may be less likely to take a view on your application.
How do lenders assess commission or bonus income?
Generally speaking, lenders assess commission, overtime, or bonus income differently from your basic salary. You’ll need to consider that:
- If your income fluctuates each month, only a few lenders will consider up to 100% of your income for affordability assessments. Many reduce this to 50-80%, and a handful won’t be able to consider your income at all.
- Each lender calculates variable income differently. While some average the last 3-6 months, others take 12 months or even 2 years’ income into account, particularly for annual bonuses. This is why how much you can borrow can vary significantly from lender to lender.
- Most lenders prefer that you have at least some level of basic salary, but earning 100% commission or bonus income doesn’t prevent you from getting a mortgage.
Lenders will also consider the time you’ve spent in the role, consistency of income, and long-term income patterns.
What criteria do lenders have when applicants have a commission or bonus income?
As a general rule, lenders want to see:
- The overall % of your income that’s derived from your bonus or commission
- How often you are paid
- Whether your commission or bonus income is contractually guaranteed or discretionary
- Your basic salary (if applicable)
- Your earnings over the last 2 years
What documents will lenders ask for with commission or bonus income?
If you’re salaried with bonuses or commission as an add-on, you’ll need to provide:
- Last 3 months’ payslips
- Latest P60
- A breakdown of your year-to-date earnings
- In some cases, an employer reference to confirm your income structure
If you’re in a high-commission role, expect to be asked to provide:
- Commission statements or bonus confirmation letters
- Evidence of income (ideally 1 year)
- Employer confirmation of future earnings and your current income structure
How can I prove my bonus and commission on my mortgage application?
Lenders always ask for proof of any bonus or commission. This will, of course, be in your recent payslips and bank statements, but your lender may also request a letter of confirmation from your employer. Having verification of the bonus or commission structure in place, as well as the schedule for when you’re due to receive additional income, will help reassure the more risk-averse lenders.
What can strengthen applications for buyers with a commission or bonus?
There are a number of ways to strengthen your application, such as:
- Clear evidence of a long time spent working in your role/industry
- Clear evidence of consistent or increasing income year-on-year
- A payslip breakdown of commission vs basic salary (if applicable)
- Work with a broker who understands how this income fluctuates and can approach a lender on your behalf who is happy and comfortable dealing with commission or salary income
- Consider timing your application in line with a strong quarter or an annual bonus to increase how much you can borrow
- Avoid major role or pay structure changes in the build-up to applying for a mortgage, as stability is more important to lenders than a big potential future uplift in pay
What if I’ve only been earning commission for a couple of months?
Many lenders want to see that at least 12 months’ worth of commission or bonus evidenced in your income, while others accept just 3-6 months if it’s consistent. If you’re concerned about how much evidence you have to present, speak to a broker.
What if my bonus fluctuates each year?
Lenders use an average when reviewing your bonus, but the period they use to assess it varies. In some cases, an underwriter may prefer a letter from your employer.
Can I get a mortgage if all of my income is commission-based?
Yes, but you may find you have access to a smaller pool of lenders. If you’re 100% commission-based but you have at least 1 year’s worth of evidence, lenders may be more comfortable.
Can I get a buy to let mortgage with commission or bonus income?
Yes, but you may face stricter criteria, such as at least 1 year of landlord experience, more stringent credit checks, and age limits.
How a mortgage broker can help when you have complex income
When your income includes commission or bonuses, a mortgage broker can make the process far more straightforward.
We know which lenders are comfortable with variable income and can direct your application to those most likely to use a higher proportion of your earnings. As your broker, we’ll also package your documents clearly so the underwriter can easily understand your income pattern, reducing the chance of questions or delays.
This targeted approach will also protect your credit score, as we’ll only speak to lenders that are genuinely suitable for your needs.
Next Steps
To see how we can help maximise how much you can borrow and secure your next mortgage, get in touch on 0345 345 6788 or submit an enquiry here.
