Borrowers whose annual income is bumped up by a bonus can often find it tricky to obtain a suitable mortgage – but it doesn’t mean there’s no hope.
A mortgage broker is offering reassurance there are a number of ‘bonus-friendly’ mortgage options available from lenders who will take into account 100% of the average bonus when assessing affordability.
According to Private Finance, most standard mortgage products only take a percentage of an applicant’s bonus into consideration when deciding whether or not to lend to them.
But by opting instead for one of the ‘bonus-friendly’ products on the market, customers have the potential to borrower a far higher amount.
One such lender is Metro Bank, which accepts 100% of the average bonus over the past two years, according to Private Finance.
Shaun Church, director of Private Finance, explained: “Mortgage lenders can be reluctant to include bonus payments in affordability calculations as generally, they’re not guaranteed, and the amount can vary significantly from year-to-year.
“However, for those in high-paid professions where bonus pay is not just common but expected, it can form a significant chunk of their finances and make a real difference in terms of the type of property they can afford to purchase.”
Borrow an extra £32k
Deals such as the Metro Bank offering can make a big difference to the amount buyers can borrow.
Take a sales and marketing director who, according to Office for National Statistics (ONS) data, receive the highest average bonuses of £14,000 on top of an annual income of £75,000.
Based on this, a standard mortgage would allow a single buyer to borrow £370,000. But a bonus-friendly mortgage, said Private Finance, would enable the same person to borrow up to £403,000 – £32,000 or 9% extra.
Even someone on the average UK age wage of £24,897 with a bonus of just over £1,300 could boost their borrowing by nearly £3,000.
Church added: “Those who do receive regular bonuses should seek the help of an independent mortgage broker when financing a property purchase.
“A broker can identify the most suitable products with bonus-friendly criteria as well as competitive rates, helping to unlock a whole new realm of potential homes.”
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