Bonus income can often make up large parts of an employee’s salary, and it’s not only bankers and other finance industry professionals who receive them. Solicitors, accountants and even doctors can receive bonus income by way of a rewarding successful year and/or an incentive to keep a good employee at a company.
Many high-earning individuals therefore look to use their bonus income when calculating what size mortgage they can afford. However, this can be a complicated process as mortgage lenders have different criteria as to what/and how much bonus income they will accept when calculating your mortgage affordability.
If you have been with the same company for a long time and have a good bonus history it is likely most lenders will look upon this favourably, and be prepared to take a large amount of your bonus into consideration. Most high-street lenders will want to see a 3-year history; however some lenders will look favourably on 2-year history or even just one year’s bonus.
With this in mind, we’ve put together a few of our favourite bonus income products. Whether you’re looking for 100% bonus income, foreign currency or a private lender relationship, there’s something for everyone.
100% Bonus Income Product
Rate: 2.01% 2 year fixed
Max LTV/Loan: 85%, £1m loan
Benefit: The lender is happy to consider 60% bonus income when there is only one years’ history but if they have 2 years’ track record they can take up to 100% of this towards affordability.
Foreign Income Product
Rate: 1.74% 2 year fixed
Max LTV/Loan: 85% LTV, £1m max
Benefit: Relatively average for affordability but they can consider foreign income bonuses which is occasionally how bonuses are paid.
Income Stretch Product
Rate: 3.19% 2 year fixed
Max Loan/LTV: this is an 85% product but they go up to 90% (£1m max)
Benefit: Will use the latest years’ bonus and will do a good income stretch (6x) so this often works out as a good product.
Average Bonus Income Product
Rate: 2.49% 2 Year fixed
Max Loan/LTV: 85%, £750,000
Benefit: Very good at using a combination of previously earned bonuses for affordability purposes – will average them out.
Private Lender Product
Rate: 2.29% 2 year fixed
Max loan/LTV: 85%, £2m
Benefit: As a private lender, they are very flexible to the approach they will take on bonus. They can take foreign currency also. As long as the client has had a good career history and appears to be on the upward trajectory, they’ll use all their bonus towards affordability even if they only have one with that employer.
If you’re looking to secure property finance using bonus income, contact us today on +44 (0)203 758 9393 or email email@example.com.