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Mortgage Advisor & Director
Does bonus income help with mortgage affordability?
Bonus income can have an effect on your mortgage application and it's important to know how lenders in the UK view bonuses.
Some lenders may take into account a bonus as part of their salary, which will increase your borrowing capacity. However, others may not even count this as income at all. The way that you receive a bonus - whether it's from an employer or from other means - will also affect how much money you are able to borrow.
The best way to ensure all of your bonus or commission income is included in your mortgage affordability calculation is to use an experienced broker. They'll be able to advise on the best lenders to approach to maximise your borrowing capacity while helping to ensure your application is approved. Get started with Teito now and you could have a mortgage in principle in minutes!
What is classed as bonus income?
Bonus income is usually not a guaranteed amount per year and it can vary from month to month.
This is different from your salary, which is typically set at a fixed amount for the year, so they provide more certainty. While some lenders may be able to take bonus income into account when calculating your application, others will not even count this as income at all.
Does bonus income count towards mortgage affordability calculations?
Lenders will take various factors into consideration before giving you approval for a mortgage; this includes an assessment of your current earnings to determine how much money can reasonably (and safely!) be borrowed from them.
Bonus income is usually paid irregularly, and as a result, it may not be taken into account when calculating affordability.
Depending on the lender, bonus income may have a positive effect on affordability calculations for mortgage applications. There are lenders who will take into account all or some of your bonus income, and may want to see how likely it is that this income will continue, for example, historic information on how regularly you achieved a bonus payment.
Are all mortgage lenders the same when it comes to bonus income?
No, not all lenders in the UK will count bonuses as part of your salary when calculating affordability.
Some may not even add this to your income at all. However, other lenders won't count bonus incomes at all which could potentially reduce your borrowing capacity.
How to boost your mortgage affordability with bonus income
The best way is to use a mortgage broker to recommend a lender who'll accept your bonus income into their affordability assessment. Here are a few other tips for enhancing your affordability when it comes to mortgage applications.
Tip 1 - Use your bonus income to pay off any existing debts, including credit cards and loans.
Tip 2 - Enhance your credit rating by using credit sensibly and making payments on time.
Tip 3 - Apply for your mortgage with multiple incomes, for example, if you're applying with a partner this will enhance your affordability calculation.
Tip 4 - If feasible, discuss with your employer a pay increase in lieu of bonus income.
Learn more and apply for a mortgage in minutes
The best way to guarantee that your bonus income will be counted towards your overall income is to use an experienced, whole of market mortgage broker.
Not only will they be able to recommend the best lenders who will take into account all of your income, but they'll also be able to enhance your chances of approval. At Teito, we've helped people with irregular or bonus income to find the best mortgage for them at market-leading rates. We work with hundreds of lenders offering thousands of deals, and our process is simple! You can manage the entire application online, from start to finish, and you can be approved in minutes.
Don't wait! Get started with Teito now for a mortgage in principle within minutes!
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.
