Mortgage on commission income
If most of your income is based on commissions or bonuses, you must be wondering if you are eligible for a mortgage or not. And the answer is, Yes, you are eligible for a mortgage on your commission incomeIncome received in the form of commission.. Many mortgage lenders can consider this form of income when accessing your affordability. However, it is also important to note that different lenders have different criteria for accessing your income which could impact the amount you could borrow. You also need to note the timings of your commission payments before starting your mortgage application. Before offering any loan, lenders would ensure that you can afford their mortgage repayments or not.
This article will discuss how you can get a mortgage on commission income, the key things to understand, the lender’s criteria, and the eligibility requirements.
Post Topics – Commission Income Mortgages
Lender’s Criteria for a mortgage on commission income
Every lender has different standards for accessing your mortgage application on your income. Some of the major points to note before approaching any lender are discussed below:
Some lenders could ask for only monthly commissions, whereas others could also focus on your quarterly commission. In all scenarios, you have to provide valid proof of your annual income. Some lenders can only accept your application if you have consistency in your income from the commission discussed in our next point.
In scenarios, where your commission fluctuates every month, some lenders can only consider a small part of your income for the mortgage application. Inconsistency in your income could result in a limit on your borrowing amount. In such scenarios, It’s always better to contact a specialist mortgage broker who can help with your mortgage application.
Along with the consistency of your income, some lenders will also show their interest in the period of your commission income. For example, some lenders could give you a mortgage on commission income if you are earning commissions for at least one year, but most lenders would prefer at least 2-3 years on your current commission income.
Some lenders could count it as a percentage of your basic salary, and others could count it as a percentage of your actual commission. Different lenders calculate the size of your commission on a different basis, as some can only consider your recent commission, and some can go for an average of the last 1-2 years. So in case if your commission is increased in recent months, it could be the deciding factor on which lender you should approach.
Mortgage Requirements for Commission Earners
You need to show different mandatory documents in front of a lender to get the mortgage with commission income. We have created the list of standard documents required by almost all the mortgage lenders for your application below:
- Utility bills
- Last three payslips with bonusIncome received as a bonus, which may affect a borrower's ab... and income mentioned
- Most recent p60 form
- Identity Proof
- Bank statementsA record of a borrower's financial transactions often requir...
- Other related documents
Please note that the document requirement varies with the lender. In addition, some lenders can also ask for additional documents, so it’s important to consult a mortgage advisor to help you with the application.
Getting a Mortgage with a 100% Commission-Based Job
Getting a mortgage with 100% of commission income is complicated because of fewer approachable lenders. Some lenders can have a flexible approach to mortgage affordability calculation. As an individual working on commission-based jobs, it is important to provide complete evidence of your income in front of lenders. When it comes to calculating your commission-based income, mortgage lenders will look for the continuation of your basic income as commissions. Commission income mortgage requires many documentations that you need to present, it’s advisable to contact a known financial advisor for consultation.
How can I improve my chances of getting a commission income mortgage?
There are many different types of commission income available for individuals. You could be getting a commission income as self-employed, or you could be receiving a commission from your employer. If you are looking to apply for a mortgage with commission income, then it’s important to understand what type of commission you are earning. There are two main types of commission-based income:
Self-Employed Income –
This includes any income earned through business activities like selling products online, running a blog etc. If you are a self-employed individual who is not employed by someone else, then this is the best option for you. The good thing about being self-employed is that you don’t need to worry about tax implications. However, there are certain things that you need to keep in mind while applying for a mortgage with a self-employed income. You can read about self-employed mortgages on our other blog.
Commission from Employer –
This includes any income received from your employer. It can include anything such as bonuses, overtime pay, commission, profit sharing etc. This is usually considered part of your regular salary. If you are employed by someone else, it is important to make sure that you are able to prove your income at the time of loan application.
Employee Income –
This includes any commission earned through employment. It could be a monthly or annual payment.
If you are planning to apply for a mortgage loan with commission income, then you must make sure that you have enough proof of your income. The best way to do this is to keep track of your earnings over a period of time. You can use your bank statement to track your income over a month or even a year. Make sure that you keep all records of your earnings and expenses. Your accountant might be helpful in tracking your earnings.
Some of the basic things that you need to have for getting a mortgage as a commission earner are previous 3-6 months’ bank statements or payslips, a P60 form, a higher deposit amount etc.
There are many other documents, that can vary as per the lender’s criteria. For example, if you are a salaried employee, then you may also need to show your W2 forms. In case you are self-employed, then you should also provide your tax returns. We would suggest contacting a market broker to know the mortgage process in detail.
What if I am unable to produce these documents?
In some cases, you may not be able to provide all the required documentation. In that case, you should try to get a pre-approval letter from a lender. A pre-approval letter shows that you meet the minimum requirements for a particular loan product. Once you receive the approval letter, you will be eligible to apply for the loan.
You can also ask your current lender to help you out. They can give you an idea about how they handle applications with commission income.
Can I get a mortgage with a commission, if I have a bad credit score?
Yes, there is a range of lenders who can help you with a mortgage on commission payments with a bad credit score. Some of them offer loans without any collateral. Others require you to put up some kind of security against the loan. There are various types of loans available depending on your needs. You can choose one based on your budget, interest rate, repayment term etc. However, if you have an adverse credit score or have credit card debt, the best option for you is to contact a bad credit mortgage broker, who can help you to find a suitable deal.
FAQs- mortgages for commission earners
Can I have a mortgage with commission-based income and bad credit?
Yes, it’s possible, but it requires additional documentation that varies from lender to lender. Credit history is always an important factor for any mortgage application, it’s good to get mortgage advice before starting your application for commission-based income.
Can I get a buy to let mortgage with commission-based income?
Yes, you can get a commission income mortgage on a buy to let property, but some lenders could also ask for additional factors like age limit, clean credit, experience as a landlord etc.
Can you get a commission income mortgage?
Getting a commission income mortgage is possible, but you may need a specialised mortgage broker to start your application.
Which lenders could offer commission income mortgages?
Few lenders could offer you a mortgage on your commission income, but it depends on various factors. Please contact a known mortgage advisor before starting the application process.