Head of Content
Mortgage Advisor & Director
Many UK workers earn bonuses or commission, but can you use this type of income to qualify for a mortgage? Here you will learn all you need to know about getting a mortgage based on bonus and/or commission income, including how much of them you can declare, which lenders allow it and more.
Can you use bonus & commission income to get a mortgage?
Yes. The vast majority of lenders will allow you to include bonus and commission income in the affordability assessment of a mortgage application. This can help you qualify for a bigger loan when declared alongside a regular salary, which could be the difference between affording the home you’ve got your eye on and being declined for the amount you need.
There will be more mortgage options available if you earn a salary on top of these supplemental income sources like these as it can be far more difficult to get a mortgage if 100% of your pay is commission, as may be the case for some in the sales profession.
Approaching the right lender is crucial to maximise your affordability as some mortgage providers will only let you declare a capped percentage of your bonuses and/or commission, 50-75% for example, but there are lenders who allow 100% of them.
Lending criteria for this income type
The reason some lenders cap the amount of bonuses and/or commission you can declare for a mortgage application is because they prefer income that is more stable and predictable.
A salary from a full-time job is consistent and therefore less uncertain for lenders, while income that can fluctuate or is not guaranteed is generally riskier.
You will stand the best chance of being able to declare 100% of any bonuses or commission on your mortgage application if your income meets the following criteria:
-
How frequently you earn bonuses/commission: Some lenders prefer any bonuses and commission you are declaring to be paid on a regular basis, such as monthly, although annual or quarterly payments are often acceptable.
-
How long you have earned the income: Mortgage lenders prefer a track record earning bonuses/commission so they can be confident you’re earning it regularly. Some will want 1-2 years’ history but others may accept less than this.
-
The percentage of your income it accounts for: As previously mentioned, it can be harder to get a mortgage if all or most of your income is commission-based with no basic salary. You will stand the best chance of declaring 100% of this type of income if it is being used to supplement an annual salary or other main source of earnings.
To get a mortgage using bonuses and commission income, you will also need to meet the general lending criteria, which you can read up on in our first-time buyer guide.
How to prove bonuses/commission to your lender
If your bonuses or commission pay is contractually guaranteed this can help your cause, but it is not essential. If they are writing into your contract, a copy of it or written evidence from your employer will be considered water-tight proof that you earn this income.
You will also need to provide your most recent payslips, bank statements - typically three months’ worth - or your latest P60, as is standard for any mortgage application.
If your supplemental pay is not contractually verifiable, the above documents will often suffice as proof that you are earning it, as far as most lenders are concerned.
How to calculate a mortgage based on bonus and commission income
Mortgage lenders will add any bonuses/commission to your salary and multiply the total amount by 4.5 to work out your maximum borrowing. Other lenders will use a higher income multiple such as 5-6 times income, but not all will let you declare 100% of your earnings.
Some mortgage providers will cap the amount of bonus and commission income you can declare, at 50-75% for example, but it is possible to declare 100% elsewhere.
Enter your total income, including any bonuses and commission, into our affordability calculator below to get a rough idea of your maximum mortgage borrowing:
Why you need a broker if you’re declaring this income
If you are applying for a mortgage and need to declare bonus or commission income, it’s a good idea to speak to a broker before you get started as finding the right lender is crucial.
If you were to approach one at random, there’s no guarantee they will allow you to declare all of your bonuses/commission, so finding one who accepts 100% can significantly stretch your affordability, and our brokers have working relationships with the lenders you need.
What’s more, the right lender can also boost your chances of securing the best rate and most suitable deal available for your needs, circumstances and income type.
You can book in a free, no-obligation chat with one of our brokers below, or choose the option to start comparing the latest mortgage deals on the market for free:
Begin your mortgage journey today...
Which lenders accept this income type?
Only a small minority of lenders will turn you away if you need to declare bonus or commission income to pass their affordability assessment, but some lenders are better equipped than others at catering with borrowers with this income type.
Below you will find examples of lenders who offer mortgages based on bonuses and commission income, along with the specific criteria they have for this income type:
-
Leeds Building Society: Will accept 100% of bonus/commission income if it can be evidenced with three consecutive wage slips. The cap is 50% without this evidence.
-
HSBC: Will allow borrowers to declare variable income for a mortgage application if it is earned quarterly, half-yearly or annually.
-
Clydesdale Bank: Will accept bonus and commission income for their affordability assessment but will cap that amount that can be used at 60%.
-
Virgin Money: Will allow borrowers to declare up to 60% of any bonuses or commission they earn on top of a salary for the affordability assessment.
For a full list of the lenders available, speak to one of our mortgage brokers.
Why choose Teito for your mortgage needs?
At Teito, there are brokers who specialise in arranging mortgages based on bonus and commission income. They can help you maximise your affordability and potentially save money in the long run by ending up with the most favorable rate available.
Here are just some of the reasons people choose us for their mortgage needs:
-
Our brokers specialise in variable income mortgages
-
Exclusive deals are often available
-
You can access the latest rates in seconds
-
It takes minutes to secure an agreement in principle
Ready to compare the latest deals and book in a free, no-obligation chat with a broker who specialises in variable income mortgages? Get started here.
FAQs
Yes. Overtime is treated as ‘variable income’ by mortgage lenders and therefore the policy for declaring it is largely the same as it is for bonuses and commission.
You will stand a better chance of being able to declare 100% of any overtime pay you received if it is guaranteed in your employment contract or you have a long track record of receiving it, but some mortgage lenders can be flexible on these things.
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.