If much of your income comes from commission or bonuses, you may be wondering if you’ll be able to get a mortgage based on your full income. For many, commission or bonuses can make up over half of the money they take home each year, so this can make a huge difference to the mortgage offers they receive.
If a large portion of your income comes from commission or bonuses then fear not – there are lenders who will consider these forms of income when assessing your affordability. However, it’s not as simple as they either do or don’t accept it, as different lenders have different criteria that can hugely impact how much you’ll be able to borrow and at what rate. In this guide, we’ll talk you through how this works so you can find the right mortgage for your situation. We will focus mostly on commission, but the same usually applies for bonuses unless otherwise stated.
What Criteria Do Lenders Take Into Account When Assessing Commission or Bonuses?
The exact criteria vary greatly between lenders, meaning that the same commission structure could lead to very different borrowing limits and interest rates depending on which lender you go to. Some won’t accept commission at all, and being rejected can damage your credit score, so it’s important you speak to an impartial mortgage broker who understands the criteria of each lender before applying. Your advisor will also be able to compare borrowing limits and rates between providers so you can find the deal that’s right for you. Let’s discuss some of the areas your broker will want to discuss before they approach lenders on your behalf.
How often is your commission paid?
Some lenders will only accept monthly commission, some monthly and quarterly, and others annual. There are also some that will accept commission regardless of how often it’s paid providing it’s regular enough to satisfy their affordability checks.
How consistent is your commission?
If your commission fluctuates considerably month to month, some lenders may only consider a portion of it to mitigate the risk – this is often capped at 100% of your basic salary, which could limit your borrowing power if your commission is more than your basic salary. There are lenders willing to consider your full income though, and our advisors will be able to help you find them.
How long have you been earning the commission?
Many lenders will want to see that you’ve been earning the commission for at least 2-3 years. However, some will consider 1 year or even just a few months if your other circumstances make you a lower risk borrower.
How much of your commission will lenders take into account?
Some lenders work it out as a percentage of your basic salary, and as mentioned earlier, this is often capped at 100% of your salary. Other lenders will consider a percentage of your actual commission – sometimes 100% of it, sometimes 50%, or sometimes none of it!
How the lender calculates the size of your commission can also vary. Some look at your recent commission only, whereas others like to take an average of the last 1-2 years. This aspect could be a deciding factor as to which lender you should approach, especially if your commission has increased significantly in recent months.
How Can I Improve My Chances of a Successful Application?
Once we understand your situation and your goals, we’ll be able to advise you on what you can do to maximise your chances of a successful application. But some of the common things that can help are:
- Providing at least 3 months of payslips with commission clearly evident
- Providing your most recent P60
- Raising a higher deposit
- Having a 2nd income (for a joint mortgage)
- Having a good credit score
What if My Salary is Commission-based and I Have Bad Credit?
If you have a complex income structure and a low credit score your choice of lenders will be even more limited, but there are still some out there that specialise in these areas. Our impartial mortgage brokers have access to every lender, so we’ll be able to see what products you’re likely to be accepted for before you risk damaging your credit score further by getting rejected.
Can I Get a Buy To Let Mortgage With a Commission-based Salary?
Most of the points above also apply for Buy To Let mortgages, so in most cases, you should be able to purchase an investment property if you meet the criteria outlined in this guide. However, some lenders do have their own criteria specific to Buy To Let mortgages, which you’d also need to take into account. Our advisors are experts in Buy To Let mortgages, so we’ll be able to find the right lender for your situation.
The Bottom Line
If much of your income comes from commission or bonuses there are lenders who will take this into consideration when assessing your affordability. Your borrowing limit and interest rate could vary widely from one lender to the next, so speak to a knowledgeable mortgage broker to see what deals are available to you and to protect your credit score by reducing the chances of being rejected.
We’re impartial mortgage advisors with over 30 years of experience dealing with commission or bonus-based mortgage applications. With an in-depth understanding of each lender’s criteria, we can protect you from being rejected and help you find a deal that suits your needs perfectly. We’re duty-bound to offer you the right advice, so book in for your FREE consultation to get going quickly – this can be done remotely via phone or video call if you’d prefer. We look forward to helping you!
