Mortgage with Commission Income
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Mortgage with Commission Income
How does commission work for a mortgage?
Commission is usually different levels of income earned on a monthly, quarterly or annual basis, depending on the work completed.
To assess commission, banks will average the earnings over a three, six or 12-month period. They either take 100% of this average or a proportion of around 60% – or possibly less.
The lender we use really makes a huge difference. If we’re trying to maximise the borrowing, we may need to aim for lenders that use those higher percentages of commission income.
What counts towards income for a mortgage?
There are lots of options, so I’ll just give you a few examples. Every bank will have pages of criteria highlighting all of the different types of income.
The most common ones are commission, overtime and bonuses. We also see a lot of car allowances and London weighting, particularly in the NHS and education, as well as night shift allowances in healthcare. We can also use pension income, investment income, government benefits, court-ordered maintenance and fixed-term contract income.
There’s self-employed income on top of that, in the form of net profit for sole traders and director’s salary and dividends for limited companies. So, many different types of income can be used, and each bank has their own criteria.
Are dividends classed as a type of commission?
I wouldn’t say that dividends are a type of commission, because dividend income is earned by self-employed applicants. The dividend figure shown on a tax return is a reflection of dividend income earned in a tax year. It could be multiple dividends making up that total.
However, it is possible to be an employee shareholder, owning under 20% of a company. They may receive dividends as a part owner. Depending on the frequency of the dividend payments for that type of client, it could be viewed similarly to commission for affordability. It’s more likely, though, that you’d have it as a bonus.
Does overtime count towards a mortgage?
Yes. It’s viewed in a very similar way to commission. Overtime, again, will vary from month to month. It also tends to be averaged and annualised over a three, six or 12-month period.
Should I include a bonus on the mortgage application?
It’s almost always positive to include a bonus. What the banks will use will vary, as with commission and overtime.
We commonly see clients receive annual bonuses – and banks want a track record of these over at least two years with the same employer.
With more regular bonuses, which could be biannually, quarterly or monthly, we’re able to use a shorter timeframe. That makes it easier – we don’t need two years’ evidence. We can look at a year for that type of bonus.
How do you calculate commission income?
We assess the market first based on the client’s income and filter out potential lenders as part of building the case. We then look at commission income in the same way the lender would assess it.
Let’s say we’ve got a lender that’s ranking highly in terms of rate and product fees, and is suitable for the client. We will assess the income in line with their policy. For some lenders, we might look at the most recent three months to get an average, and then annualise it. Or, we may need to look at the full 12 months – we do whatever the lender would do.
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What mortgage can I get on a £40,000 salary if my OTE is £100,000?
Let’s say the client will meet the full On Target Earnings. If so, we could lend in the region of £500,000 to £600,000, depending on the lender we’re proceeding with.
We may be able to get even larger borrowing levels with a five-year fixed rate – although at the moment in October 2025, it’s not necessarily advisable to do that. That’s a conversation we would have with a specific client.
So OTE can be great, of course, but we need to see the specific payslips showing the income received. We would probably look at the most recent three months to begin with, to get a scope of how close it is to that OTE figure.
What base salary do you need for an £800,000 property in the UK? How could my commission help?
There’s another question we need to answer – what deposit is available? That will tell us what the gap is in terms of mortgage lending, because there are limits depending on the deposit size.
On an £800,000 purchase, we would normally need a minimum of 10% deposit – which is £80,000. We’d then be needing around £720,000 in lending. To borrow this amount, you would need a household income of around £131,000 – or around £120,000 if the client is open to a five-year product. Again, that’s not necessarily advisable in the current market as of October 2025.
That £131,000 figure can come from just basic pay, or it could be a blend of basic, commission and bonus. We’ll be able to assess all of that pretty much straight away for a client.
What is the best income multiple for a mortgage?
For first-time buyers, the maximum is around 5.5 times to six times the applicants’ combined gross income. We’re seeing quite a lot of this at the moment for high earners of £75,000 to £100,000. That’s only for first-time buyers, because of current provisions where they can borrow a little bit more.
Non-first-time buyers will find it almost impossible to achieve that 5.5 to six times combined gross income position. We may be capped at a Loan to Income level of perhaps five times. It’s all down to the specific earning situation and needs of the client.
Can I get a mortgage for six or seven times my salary?
Six is just about possible, but it’s very niche lending. That’s available in certain situations, but you won’t find seven times income.
There are other ways to get around that, though. You can have up to four applicants on a mortgage application, where all the incomes are utilised. It might not be at the maximum income multiples, but that can generally bolster a case. There are options to add family members to a mortgage to bolster income and borrowing levels, as well.
How can a mortgage broker help here? Have you got anything else to add?
We’re on hand to cut through all these concerns around how to use your income in the most advantageous way. Generating the best possible outcome for clients is exactly what we are FCA-regulated to do.
We always have to demonstrate that the best and right outcome has been created for any particular client or financial position. That’s why we’ve got great reviews, and this is exactly the type of thing that we’re here to do.
Mortgages operate with entirely different acceptance criteria from lender to lender. Understanding that, together with the wider economic environment is more complex than most people realise. We’re on hand to support clients from the very beginning to far into the future. There are also no charges on mortgage cases with us.
Key Takeaways:
- Commission income is a common form of variable pay that lenders consider when assessing mortgage affordability.
- Not all lenders will accept 100% of commission income; some may take a proportion (e.g., 60%) or less.
- Overtime and bonuses are also commonly accepted income types for mortgages and are assessed similarly to commission.
- Different lenders have varying policies on how they assess and utilise commission, so selecting the right lender is crucial for those with substantial commission earnings.
- A mortgage broker can help navigate the complex acceptance criteria of various lenders and determine the most advantageous way to use your income.
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