When submitting a mortgage application, you will be asked to outline your income. This can come from multiple sources, including your salary and bonuses. A common issue faced by those working in sales is that their basic salary may be low, but this is topped up with regular commission.
Some lenders will not count all of the commission towards your affordability calculations, which can leave you short of what you need to buy a home. This is relevant because lenders are not only tasked with considering the “here and now” of your mortgage, they also have to look to the future. So your mortgage might be affordable right now, but is it sustainable.
As with all directives, it is down to individual lenders to determine how they carry out these checks and what weight they assign to the outcome. This means that a more conservative lender might only consider a portion of your commission as regular income, but if you find the right lender, you could have all of your commission counted as regular income.
The majority of high street lenders will look at your track record as an indicator of future income potential. This means that a long work history with a regular and steady income will serve you well when it comes to applying for a mortgage. Lenders will want to see that you have been with the same company for a long time and will take your P60 as evidence of sustained income levels.
Another factor that lenders will look at is the “year to date” figure on each payslip. This is why a regular monthly commission is better than an end-of-year commission paid in one lump sum.
If there is any inconsistency in your earnings, you can expect them to take half of your annual commission and add this to your basic salary. This can be very disappointing as it will appear as if you are earning a lot less than you actually earn.
If you work in a sales role that allows you to build your earnings on commission, it is best to approach the right lender. You need to find a lender that works with applicants in your position and understands the nature of your income.
By working with Niche Mortgage Info, we can connect you with whole-of-market brokers that will give you the best chance of finding a lender that understands your situation.
We can not only help to connect you with a lender that will take your full income into consideration, we can also help to ensure you get the best possible deal. Remember that a small change in your interest rate can add up to tens of thousands in additional costs over the lifetime of a mortgage.
In general, we can help to secure the following mortgages for sales professionals working on commission:
If you’re on a low income and high commission salary structure and are looking to secure a high multiple mortgage, get in touch with Niche Mortgage Info today.