Getting a work bonus after smashing your targets is like drinking cold beer after a hard day’s work.
You can go out for a nice dinner, buy yourself a new TV or even take a holiday.
Bonuses are pretty awesome but did you know that only some lenders will accept all of your bonus income when they’re considering lending to you?
Other lenders will only accept part of this bonus income. This can have a big impact on your borrowing power so it all comes down to the consistency of your bonuses and going with the right lender.
How much of your bonus income will be accepted?
How much of your bonus income will be accepted depends on how regular the bonus payments are:
- Monthly or quarterly: Some lenders can accept 100% of your bonuses if you earn them regularly. Lenders will usually like to see a letter from your employer saying that your bonuses are regular and ongoing.
- Annual: 100% of your annual bonuses can be accepted but you must have been earning the bonus for two years at least.
- Performanced-based bonus: Again, these need to have been earned on a regular basis over a set period of time.
- Irregular: Assessed on a case by case basis.
- One-off: If you have earned a bonus that is not going to repeat, then it will not be included as part of your income.
What documents will I need to provide for my bonus to be accepted?
It’s essential to provide as many documents as you can to prove your bonus income, specifically:
- Two current consecutive payslips.
- A letter confirming your bonuses are likely to continue.
- Your most recent tax return or group certificate
It should be noted that some lenders may ask for two years tax returns.
How do lenders view bonuses?
Bonuses are rewards that you get for good performance at work and they’re immensely satisfying. Despite this, lenders see them as a risk when assessing your mortgage application.
This is mainly because bonuses are reliant on you meeting the targets set for you. If you are not able to perform well, then you won’t get a bonus.
Moreover, some employers promise you bonuses but do not deliver on it or move the target every time you are about to reach it. Because of this it becomes difficult for lenders to consider these bonuses when assessing your income.
We have a great understanding of the lending policies of our panel of over 40 lenders meaning we know exactly which lender will accept your bonus income.
Fill in our free assessment form or call us on 1300 889 743 and discover how we can help you get approved.