Do mortgage lenders take bonuses into account?

[GnG84]

Hi,

Been offered a job with a lower base salary than my current job, but with guaranteed bonuses which would add up to quite a bit more than current salary. Also career progression is pretty much guaranteed to be much speedier and so salary should increase pretty quickly too.

It would be a no brainer if it weren't for the fact we are desperate to move in the next year or 2. I hear different things about banks and bonuses when it comes to mortgage applications. I guess because different banks operate slightly differently (?)

Just after a bit of advice/personal experience please 😊

TIA

So they do - but not often at 100%.

You need to be able to prove some regularity to them.

If the bonuses are a significant % of your total pay, you might be best with a specialist mortgage provider albeit interest rates may be higher.

I used a high street bank and I think they ‘discounted’ my bonus to about 50% of it’s value, even though it’s regular.

Regular, guaranteed bonus with 2 or 3 years proven income wouldn't be a problem for a lot of lenders. Not necessarily high street lenders, who would possibly calculate offer based on a percentage of bonus.
You could put the details into their affordability calculators online to see how you would measure up.

Depending factors would include percentage of bonus to salary.
Loan to value. Affordability etc

Less mainstream lenders are usually the ones with the higher charges and interest. As they will be prepared to take more perceived risk.

I'm not really qualified to answer but this might also apply to me one day so I read it.

If it really is guaranteed, then do you have that in writing?

I went through a broker who directed me to a lender who would base their decision on the last 3 months of income, bonus or no bonus. It meant I had to time things carefully as the bonuses weren't guaranteed but it worked out pretty well. This was a few years pre-Truss though, I imagine there's been some tightening up around affordability since then.

There are two reasons for a company to offer "guaranteed" bonuses:

1. they are guaranteed given your and the company's performance - they may not be achievable or may be reduced in difficult trading positions
2. they reduce pension contributions (especially employer ones).

Yes bonuses can be taken into account. But it can be risky to max this out. My Ex and I were once offered to add 3x a one off bonus that we knew would never be repeated.

I'm an advisor for a high street lender- we do accept bonus, overtime and commission but require a certain number of payments to have been made and use the average of them.

Eg annual bonus- needs last 2 years payslip, quarterly- needs last 3 payslips, weekly would need 8 payslips

Thanks for all your replies and advice so far 👍 Very helpful