When applying for a mortgage that includes bonus income, lenders require specific documents to verify that your bonuses are consistent and reliable. Providing the right paperwork upfront can make the application process smoother and improve your chances of approval.

Typically, lenders will ask for:

• Payslips that clearly show your bonus payments over the last two to three years. These help demonstrate a regular pattern of bonus income.

• P60 Forms which summarise your total annual income, including bonuses, as reported to HMRC.

• Tax Returns may be requested, especially if your bonus income is part of a company payment or self-employment earnings such as profit share.

• Employer Letter confirming your bonus structure and history. This letter should detail how often bonuses are paid, the typical amount, and whether they are guaranteed or discretionary.

Having these documents prepared and up to date helps lenders accurately assess your bonus income, ensuring it’s factored appropriately into your mortgage affordability.

When assessing your mortgage application, lenders don’t always count 100% of your bonus income. Because bonuses can vary year to year, lenders typically take a cautious approach to ensure your earnings are sustainable.

Most lenders will look at your bonus payments over the past two to three years and calculate an average. This average is then used as part of your total income for affordability assessments. However, some lenders may only consider a percentage of your bonus, often between 50% and 100%, depending on how consistent and reliable your bonuses appear.

If your bonuses have been steady or increasing over time, lenders are more likely to accept a higher proportion. Conversely, if bonuses are irregular or have recently fluctuated, they might apply a lower percentage or exclude them altogether.

Understanding how lenders treat bonus income can help you better prepare your application and choose the right lender for your circumstances.

Bonus income can have a significant impact on how much you’re able to borrow when applying for a mortgage. Because bonuses add to your overall earnings, they can increase your borrowing capacity, sometimes substantially. However, since bonus payments are often variable and not guaranteed, lenders tend to be more cautious.

Most lenders will require a consistent history of bonus payments, typically over two to three years, and will calculate an average bonus income to include in their affordability assessment. If your bonus payments are stable or growing, lenders are more likely to view your total income positively, which could allow you to borrow more.

That said, if your bonuses fluctuate or have recently decreased, some lenders may only consider a portion of your bonus income or exclude it altogether, which might reduce your borrowing potential. Additionally, having bonus income alongside a strong credit history, a stable job, and a good deposit will further improve your chances of borrowing more.