Bonus Income Mortgage Specialists

If a significant portion of your income comes from bonuses, commissions, or other variable sources, you might be wondering how this affects your mortgage eligibility.

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We Navigate Bonus Income Complexities

At Lansdown Financial Services, we specialise in helping individuals with bonus income navigate the complexities of mortgage applications.

Lenders often require detailed evidence and consistent history of bonus payments before including them in affordability calculations. Our experienced advisors know exactly what documentation you need and which lenders offer the most flexible terms for bonus earners.

We’re here to help you maximise your borrowing potential and find a mortgage deal that truly reflects your total income, giving you peace of mind and confidence in your next move.

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FAQ

Using Bonus Income For A Mortgage

If bonuses make up a significant part of your earnings, choosing the right lender can make a real difference. We’ll explain how lenders may assess bonus income, how much of your bonus they could use for affordability and the income history and evidence you may need.

Can Bonus Income be included in my mortgage application?

Yes, bonus income can often be included as part of your mortgage application, but lenders typically have specific criteria for how they assess it. Because bonuses can fluctuate year to year, lenders usually require a consistent history of bonus payments, commonly over the last two to three years, to consider it as reliable income.

Lenders will review your payslips, P60s, and sometimes ask for a letter from your employer confirming your bonus structure and history. This helps them understand whether your bonuses are a regular, ongoing part of your earnings or more occasional.

If your bonus payments are consistent and well-documented, including them in your mortgage application can increase your borrowing power and improve your chances of securing a mortgage that reflects your true income. However, if bonuses are irregular or recent, some lenders may only consider a portion of them or exclude them altogether.

What documents will I need to prove my bonus income?

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.

How much of my bonus income will lenders consider?

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.

Will Having Bonus Income Affect How Much I Can Borrow?

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.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Case Studies

The Story

A sales professional approached Lansdown Financial looking to secure a £550,000 mortgage to purchase a £742,000 family home in Bath, representing approximately 74% loan-to-value (LTV).

Although the client earned a substantial overall income, a significant proportion of their remuneration came from variable bonus and commission payments rather than their basic salary. With an offer already accepted on the property, they needed a mortgage lender willing to recognise their full earnings to support the required borrowing.

The Challenge

Securing a mortgage using bonus and commission income can be challenging, as many high street lenders only consider a proportion of variable earnings when assessing affordability, even where the applicant has a consistent track record of receiving these payments.

Despite the client’s strong overall income, lenders restricting the amount of bonus and commission income they would consider were unable to support the required £550,000 mortgage.

Our challenge was to identify a lender willing to assess 100% of the client’s variable income, while also offering competitive mortgage terms and accommodating the tight timescales associated with the property purchase.

The Solution

Lansdown Financial took a tailored approach, reviewing the client’s remuneration structure, historical earnings and supporting financial documentation to identify lenders whose affordability criteria were best suited to their circumstances.

By liaising directly with mortgage underwriters and demonstrating a consistent history of bonus and commission payments through payslips and P60s, we identified a high street lender willing to consider 100% of the client’s variable income for mortgage affordability.

Through our understanding of complex income structures and specialist lending criteria, we successfully secured the required £550,000 mortgage at approximately 74% LTV on competitive terms, at an interest rate significantly lower than previously quoted by another mortgage broker.

This enabled the client to proceed with the purchase of their new family home without their reliance on variable income restricting their borrowing options.

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