Will bonus income be accepted by the bank?

Any general questions you might have in regards to loans and finance.
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albee
Posts: 45
Joined: Wed Apr 07, 2010 12:04 pm

Will bonus income be accepted by the bank?

Post by albee »

Hi guys! I am planning on buying a house and I need to borrow money from the bank to complete the purchase. But I am worried that my loan will not be approved easily. Actually most of my income is earned through bonuses and I have heard that banks mostly only consider the base salary instead of the bonus income. If this is the case then my income will be much lower than what I in fact earn from my job. Are there any banks willing to accept the bonus income?

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Otto Dargan
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Re: Will bonus income be accepted by the bank?

Post by Otto Dargan »

Hi and welcome to the forums albee,

In comparison to a regular monthly salary, lenders view bonuses as a very unreliable and unpredictable measure of consistent income. However, each lender may have a different policy for how they will assess bonus income.

While some lenders implement a more flexible approach and regard bonuses as a stable form of earnings, other lenders find it hard to consider bonus income in their assessment. This is because these forms of earnings are mostly based on the employee’s overall performance and it is often paid at the employer’s discretion.

The regularity and the frequency of the bonus payment may largely determine whether the lenders will accept the bonus income or not such as:
  • Monthly or quarterly bonuses: If bonuses are paid regularly and you can provide a letter from your employer confirming that the payment is regular and ongoing then one of our lenders can accept 100% of your bonuses. So if you have a minimum three month history of receiving bonuses then you can borrow up to 90% of the property value and if you have a two year history of bonus income then you can borrow up to 95% of the property value.
  • Annual bonuses: One of our lenders may accept 100% of your annual bonus however you will be required to provide evidence of a two year history of your earnings in order to prove that this income is ongoing. You may be entitled to borrow up to 90% of the property value and up to 95% on a case by case basis.
  • Performance based bonuses: These bonuses may be included in assessment depending on how regularly you have received them in the past and for how long you have been receiving them.
  • Irregular bonuses: If your bonus is irregular then it will be assessed on a case by case basis.
  • One off bonuses: One off bonuses cannot be included as part of your assessable income.
Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

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albee
Posts: 45
Joined: Wed Apr 07, 2010 12:04 pm

Re: Will bonus income be accepted by the bank?

Post by albee »

What about documents? What do I need to provide to the bank as a proof of bonus income?

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Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: Will bonus income be accepted by the bank?

Post by Otto Dargan »

Hi albee,

The documents that you may need to provide can depend on the specific guidelines of the lenders. While all lenders require supporting documents that evidence your bonus income, each of them may have different requirements.

Generally, you may be able to submit any of the following documents:
  • Two current consecutive period’s payslips.
  • A confirmation of letter from your employer stating that your bonuses are likely to continue.
  • Most recent tax return or group certificate. Two years tax returns may also be required in some cases.
If you would like to know more about these then you can check out our website. We can also be reached on 1300 889 743 or you can fill in our free assessment form to see if you qualify for a loan or not.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

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albee
Posts: 45
Joined: Wed Apr 07, 2010 12:04 pm

Re: Will bonus income be accepted by the bank?

Post by albee »

Oh sure. I will check through the documents I have and give you a call to see if it possible for me to qualify for a loan with bonus income. Thanks and speak to you soon!

burGer
Posts: 34
Joined: Thu Jun 27, 2013 9:18 pm

Re: Will bonus income be accepted by the bank?

Post by burGer »

Hi. Like albee, I too mostly earn bonuses. A large percentage of my income is based on bonuses. What I want to know is about the loan features available to someone in my situation. What sort of loan features would I have an access to?

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Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Will bonus income be accepted by the bank?

Post by Otto Dargan »

Hi burGer,

All the features that are available on normal loans may also be available on your loan. Some of the features your loan may have are:
  • Interest only.
  • Fixed rate.
  • Line of credit.
  • 100% offset.
  • Redraw.
  • Extra repayments.
  • Other discounts such as professional package and basic loan discounts may also be available.
Other purposes such as home or domestic use, purchases, refinances and construction may also be acceptable. In addition, the loan can also be used for the purpose of buying investment properties.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

burGer
Posts: 34
Joined: Thu Jun 27, 2013 9:18 pm

Re: Will bonus income be accepted by the bank?

Post by burGer »

Thanks for letting me know about these features. I will check these out in your website. Bye!

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