Commission income home loan

What is commission income?

Commission is a type of income received from your employer that is based on your sales results rather than the number of hours you have worked. Many salesmen and women receive part of their pay as a base salary and then commission in addition to this.

Some of the highest paid people in Australia are commission only salespeople as they are paid a much higher percentage of commission and have no ceiling on their income.

What do lenders think?

Australia has many successful commission income salesmen who have trouble applying for a home loan because their bank will not consider their income when assessing serviceability. Most lenders want to see a two year track record so they can be sure your income is stable. This isn’t a fair way to assess your mortgage application because many salespeople can choose to work harder to earn more or have had their income increase as they gain more experience.

Generally banks are cautious of relying on commission income because commission income is not guaranteed and can fluctuate. Of course your income can skyrocket but on the other hand the income can also be zero. Thus lenders are more comfortable with those who earn a regular monthly salary.

There is no need to worry as there are lenders that can approve your home loan without a lengthy history of earning commission income. With some lenders often as little as three months evidence of your income is enough to get your mortgage approved.

Why is commission income reliable?

In our experience salespeople tend to have very stable incomes and can support a loan without posing a higher risk to themselves and the lender. This is because of a few factors that many lenders don’t take into account:

• You can always work harder to earn more money.
• Nothing motivates you to succeed more than the need to meet financial commitments such as a mortgage.
• Salesmen cost a company very little to keep employed in comparison to salaried employees. As a result they are less likely to be made redundant during economic downturns.
• You know how stable your income is and you would not apply for a loan unless you are confident that you can meet the repayments.

Which lenders can help?

We have access to several banks and lenders who would gladly take your commission income into account when assessing your mortgage for approval. With the huge variety and number of contacts that we have there is sure to be a lender that will suit your home loan needs. Please enquire online for further details and to apply for a home loan with the use of commission income.

How do lenders assess your commission income?

Lenders assess commission income in different ways and require different forms of supporting documents as evidence. However most lenders would require that you provide the following:

• Your two most recent payslips. This must show your Year To Date (YTD) income which the bank can then extrapolate to calculate your annual income. Your YTD income must cover a period of at least 3 months to be acceptable on its own.

If your payslip does not show a year to date income then you may have to provide additional documents such as:

• Your most recent group certificate or tax return.
• A letter from your employer.
• Other evidence of your sales targets and sales results covering a period of no less than 3 months.

However most lenders are not so lenient and may require the following:

• Two years tax returns and notices of assessment. The lender will then average the two years income.
• A letter from your employer confirming that you receive regular commission income.

When applying for a home loan it is important to choose a lender that will accept 100% of your commission income rather than just 50% as is common practice with many lenders. Please enquire online to talk to a mortgage broker who specialises in commissions income home loans.

Who is this loan for?

This loan is for commission based employees who have a regular and consistent flow of commission income which can be supported by documents such as payslips and confirmed by their employer. Some of the common commission earners include salesmen, sales agents, real estate agents, car sales, B2B sales and mortgage brokers.

Which loan types are available?

All loan types: Professional packages, basic loans, lines of credit, fixed rates.

How much can I borrow?

You can borrow up to 90% of the property value and possibly 95% if you are in a very strong financial position.

What can I use the loan for?

Home or domestic use, investing, purchases, refinances and construction are all acceptable loan purposes.

Discounts

Professional package and basic loan discounts are available.

Loan features

All loan features: Interest only, fixed rate, line of credit, 100% offset, redraw, extra repayments.

Do you receive commission income? Apply for a home loan now!

We can provide you with a large selection of lenders and banks that can cater to your specific and particular needs. Enquire online for more information on how to make your commission income work for you!