Using Bonuses and Commission on Your Mortgage Application

There’s lots of jobs (particularly sales and customer service roles) that rely heavily on incentivised bonuses and commission schemes to bolster relatively modest basic salaries. But, how does this work when you’re applying for a mortgage?

Luckily, there’s plenty of specialist mortgage lenders who will accept applicants with more complex incomes. Read on to find out how this works.

Can I get a mortgage on a commission-based income?

Yes, it’s possible to get a mortgage if your earnings are based on commission or bonuses! But because your income isn’t as straightforward as someone with just a basic salary, you’ll have to make sure your application is presented properly to lenders so these additional earnings can be included. 

It used to be the case that lenders wouldn’t consider any type of income that fluctuates, but that has since changed. There are now plenty of mortgage lenders who will consider additional income, particularly regular bonuses and commission-based salary schemes. However, the amount you can include will vary from lender to lender.

Our Mortgage Experts know which lenders provide mortgages for commission-based incomes, and how to find the  right mortgage for you. If you get in touch, a member of our mortgage team can contact you to discuss your salary structure and mortgage requirements.

What bonus/commission income is acceptable to a lender?

As is often the case, what a lender is willing to count towards your income will depend on who you apply to. Some lenders will accept all of the income you evidence, while some will only accept a percentage of monthly commission or your guaranteed bonuses. 

It’s definitely possible to get a mortgage without fixed earnings, but you’ll have fewer options to choose from than if your income was the same each month. Some lenders might ask you to put down a bigger deposit. 

If you’re applying for a joint mortgage and one of you is commission-only, you could still get accepted if the other applicant’s income is enough to cover the repayments and other outgoings.

Our Mortgage Experts aren’t tied to a particular lender, meaning they’re free to find the best right mortgage for you with a lender who counts bonuses and commission towards your income.

How does income affect how much I can borrow?

Lenders use a multiple of your annual income to initially calculate how much you could borrow for a mortgage. In most cases the maximum is between 4-4.5 times your annual income (or net profits, as evidenced from your business accounts if you’re self-employed).

So, for example if your annual basic salary is £40,000 and a mortgage lender is willing to let you borrow up to a maximum of 4x this figure, the most you could borrow for a mortgage would be £160,000.

Now, let’s say, on top of your £40,000 basic salary you earn a further £20,000 in bonuses and commissions. If your mortgage lender accepted 100% of this additional income, 4x this amount would now mean your maximum potential mortgage borrowing has risen by £80,000 to £240,000. Quite a difference.

However, mortgage lenders all work to their own lending criteria. So, some lenders may accept 100% of your additional income from bonuses and commissions, but not all of them will. That’s why choosing the right lender is so important.

Lenders also need to know you can afford the mortgage repayments without struggling. They’ll run affordability checks where they test what might happen if you didn’t get a bonus for a few months or if you had a situation where you had to take some leave. 

Read more about the mortgage lending criteria in our guide: What Do Mortgage Lenders Look For in Applicants?

How do I prove my bonus/commission-based income?

It’s much easier to prove your income if you’ve been in your job for a while. This is because you’ll have payslips as evidence that will hopefully show a pattern of income using your bonuses and commission.

Some lenders might request that you can’t apply until you’ve been in your job for a year. Other lenders might be happy to consider you if you’ve just started a new job. It all really depends on which mortgage lender you apply with.

This is why it’s wise to speak with a mortgage broker before you apply. Our Mortgage Experts will know which lenders look more favourably on these types of applications and can help you prepare the necessary evidence of earnings you’ll need.

What if I’m part time?

A lot of part time jobs have a bonus system as a way to boost your salary. If you’re a server or bartender you can count tips towards your income, but you’ll need to show this extra income properly in your application (that’s where using a mortgage broker really helps). 

If you have a lower salary because of working part time, any additional income you receive will really help your application. Make sure you’re properly documenting and declaring your income, and a lender should take it into consideration.

How can I improve my chances of getting a mortgage using commission and bonuses?

Getting a mortgage when your income fluctuates can be a challenge, but it’s not impossible. There are some steps you can take to give yourself the best possible chance of being accepted.

Check your credit score

Along with your income, lenders will be looking at your credit score. If your income is complex but you have a good credit rating then this will work in your favour. 

Check your credit score regularly (we recommend Checkmyfile**) and do all you can to keep the number high and your record looking good. 

Get simple credit tips in our Guide: How to Improve Your Credit Score. 

**When you click through to our affiliate links, we may earn a small commission at no extra cost to you. We only recommend sites we trust and believe in.

Get to grips with your income

Compared to someone with a fixed salary, the amount you’ll be able to borrow can be tricky to calculate. Lenders try to tackle this by looking at your annual income - including any bonuses and commission payments - from the last three years and will take an average or lowest figure to work out how much you’ll be able to pay back. Start going through your payslips to get an idea of numbers. 

You can then use our Mortgage Calculator to see how much you could potentially borrow. 

Put down a bigger deposit

If you’re a first-time buyer, putting down more money upfront will do more to offset the risk for potential mortgage lenders. It also shows you’re a good saver, and will open you up to more competitive deals.