Lenders tend to get wary when bonuses are around or are higher than your basic salary, when assessing your bonus income mortgage.
For example, if your bonus exceeds your basic salary, many lenders cap the amount they use for assessment at your basic salary.
Here is an example.
Basic of £100,000, bonus of £175,000, lender will only include a bonus of £100,000 when assessing the application.
Most lenders only take 50-60% of the bonus paid as well.
As in the same example, while your income on paper may be £275,000 a lender will only work on £150,000. This would deeply debilitate your borrowing capacity.
The good news is that not all lenders take that approach. Typically, with a 2-year track record, there are lenders that will take 100% of the income. Some even with just one bonus paid. It just shows how wildly different lenders approach this.
We see more and more clients being paid in Shares, which vest over various periods. If you want to use this type of income many lenders struggle as it sits between income and assets.
That said, depending on your overall profile and lending objectives, there are lenders that can see past these. They include them as income, or at least, a method to repay the loan at a later date.
As you can see above, the more complex the income, the more help you often need to be approved for a bonus income mortgage.
We specialise in this area, so would encourage you to speak to one of the The Team just to see what your options are before progressing too far with an application. This will ensure you get a smooth experience when applying for your bonus income mortgage.
A fee of up to 1% of the mortgage amount may be charged depending on your circumstances (ie. £1000 on a £100,000 mortgage). A typical fee is £495 plus we will receive commission from the lender.
Your property may be repossessed if you do not keep up repayments on your mortgage.
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