If your pay is based on commission paired with a low basic salary, then it’s likely that you will have to use a specialist lender for your mortgage – but it’s certainly achievable.
This is because, as your commission is uncertain and inconsistent, the lender can’t determine how much you can borrow accurately and will be hesitant in doing so.
Lenders are now legally bound to assess your affordability by taking your history into account and anticipating your ability to make payments in the future.
However, as with all directives, each lender’s interpretation is different, which means their process and parameters change, so some understand a variation in your income is normal and others don’t.
Are bonuses and commission treated differently by lenders?
When lenders are assessing your affordability, they will begin by look at your past track record, and they would expect you to have stayed with an employer for a number of years and to be able to evidence this with P60s.
They will also want to look at the year-to-date (YTD) figure on your latest payslip, and they have a heavy preference if your bonus or commission is paid on a monthly and regular basis.
If the lenders see a consistent pattern of income, and Whilst there are a small number of lenders that won’t look at bonus income, most will look at your two-year average of bonus payments. They will then only consider 50-60% of that average as it’s an inconsistent form of income with no certainty.
This 50-60% is what goes towards working out your affordability assessment or income multiple.
As long as you speak to an adviser that has access to a wide range of lenders, they will be able to pass your application to specialist lenders that deal exclusively with low income, high commission applicants.
To find out how to get a mortgage if your salary is commission-based, speak to one of our expert advisers, and they will be able to walk you through your next steps.