Bonus Income Mortgage

Everyone receives their income in different ways. Some people have a fixed salary; some get big payouts upon the completion of contracts and others get paid regular allowances.

However, what about those of you that receive part of your income as a bonus? Some individuals receive larger bonuses than they do their actual salary!

Naturally you would expect the banks to include this bonus income in their calculation of your overall salary. However this is not always the case!

Does this affect the way the banks view your employment and income? What about your credit score, will the banks still lend? Read on to find out more!

Why won’t the banks accept my bonus income?

The issue with bonus income is that from a banks point of view it is not an actual reflection of your ongoing earnings. Bonuses are not guaranteed! Although you may receive a bonus in one quarter, your income could drop substantially if you fail to reach the following target and are not awarded a bonus.

Therefore, your income is not considered consistent. Lenders are often unwilling to loan an amount that you are incapable of repaying solely from your base salary.

Our mortgage brokers are approval experts and know how to get the banks to accept your bonus income. Call us on 1300 886 115 or enquire online today and we’ll look for a lender that can help you!

When will the banks accept my bonus?

The percentage of your bonus that will be accepted as regular income varies with every lender. It largely depends on when your bonus is paid out:

Annually, monthly or quarterly:

Whether your bonus is paid annually, monthly or quarterly, we know of lenders that are willing to accept all of your bonus payments when calculating your ability to repay your mortgage. You may even be eligible to borrow up to 90% LVR (90% of the property value)! This is good news for those of you who receive the majority of their income from bonuses.

Although some lenders only accept a certain percentage of your bonus and they must have proof that you have been receiving this bonus for at least two years. This can become a problem for those individuals who have recently changed into a new role and only received a few months worth of bonus payments.

Performance based:

If you are on a performance based bonus or any other type of discretionary bonus, the inclusion of this as part of your salary will be individually assessed by the banks, subject to their lending criteria and the length of time that you have been receiving it.

Our mortgage brokers are approval experts and know how to get the banks to accept your bonus income. Call us on 1300 886 115 or enquire online today and we’ll look for a lender that can help you!

Working on a bonus income basis

In today’s modern world where management consultants and investment bankers earn high incomes and manage lucrative portfolios, bonuses are becoming increasingly common. Workers have targets and KPI’s (kep performance indicators) that they have to reach and if they do, they are rewarded for their good performance with a bonus.

For example, an investment banker might be a full-time employee on a base salary of $150,000. However, they may also be entitled to bonuses where they reach a specific target. Their bonus might be calculated as a percentage of the amount reached. In this case, the bonus might be upwards of hundreds and thousands of dollars!

Individuals in these circumstances may earn large amounts each year, however, sometimes this is not sufficient to qualify for a loan as not all banks include bonuses as income. What does this mean?

High earners don’t always get loans!

Despite popular belief, you may be on a high income but still have difficulty getting a mortgage. Whilst you may be able to demonstrate that you can make regular repayments, you may still present a risk to the bank if you cannot prove that this income is ongoing. Further, some lenders may not accept bonus income at all!

This can be similar to commission-based income where you may earn a large sum of money each year however based on lender policies may still present a higher risk.

Our firm works with many different banks and lenders and our brokers are approval experts with bonus income mortgages. We can also provide help if you earn your bonus income as a part time or casual employee.

Read these pages, then call 1300 886 115 or enquire online today and we’ll look for a lender that can help you!

What do I need to provide?

If you are receiving annual, quarterly or monthly bonus income, you may be required to provide the banks with evidence of anything from three months to two years history of your bonus income, depending on the lender.

Documents that may help to verify this are:

  • Pay slips,
  • Letter from your employer which verifies that you receive those bonuses and that you will continue to receive them or the terms on which your bonuses are based, and
  • Recent tax returns or group certifcates (only some lenders require these).

However, it depends on the banks lending criteria so it is best to speak to one of our mortgage brokers.

Speak to us today!

We are the leading experts in employment mortgages for bonus income loans. If you are receiving part of your income as a bonus and are unsure of how the banks will view your earnings, contact one of our expert mortgage brokers!

We know which banks give a more flexible assessment of your income and how each lender will view your application. This will ensure that your application is submitted with the right financial institution, to maximise success! Call 1300 886 116 or enquire online and find out how we can help.