Will the bank accept 100% of my bonus income?
Yes! We may be able to get the bank to use 100% of your monthly, quarterly or annual bonus income.
It all comes to how long and how regularly you receive this income.
- You can borrow up to 95% of the property value or up to 100% using a guarantor.
- 3 months in your job: Some of our lenders will use 80% of your overtime income.
- 2 years in your job: Some of our lenders will use 100% of your overtime income if it is consistent.
- You may need to provide a letter from your employer confirming the consistency of this additional income.
- Performance-based and irregular bonuses: Considered on a case by case basis depending on the consistency of this income. Generally. this is acceptable if you have a 2-year history of receiving these bonuses.
- One-off bonuses: Cannot be considered as additional income.
Enquire online or call us on 1300 889 743 and one of our specialist mortgage brokers will help you determine how much of your bonus income will be accepted by the banks and which institutions are likely to lend.
What do lenders think about bonuses?
Generally bonuses are reliant on employees meeting the KPIs or targets set for them at the beginning of the year. If performance is good then bonuses are given out and awarded, however if the performance of the employee is unsatisfactory then no bonuses are given out.
In some cases employers simply don’t pay the bonuses that they have promised, or they move the goal posts making the targets effectively impossible to reach.
Because of the fact that bonuses are based on the employee’s overall performance and they are often paid at the employer’s discretion, it becomes difficult for the banks to consider these bonuses in their assessment. In comparison to a regular monthly salary, bonuses are a very unreliable and unpredictable measure of consistent income.
Additionally, many bonuses are not paid monthly but rather annually or quarterly, making it harder for those who pay their bills on a day to day basis.
What documents do I need to provide?
All lenders will require supporting documents that evidence your bonus income. However each lender has different requirements. Their guidelines will determine the documents you must supply. Generally, you should try to provide as many documents as you can.
Most lenders will require some or all of the following:
- Two current consecutive payslips.
- Letter of entitlement from your employer / letter confirming your bonuses are likely to continue.
- Your most recent tax return or group certificate, in some cases two years tax returns may be required.
Enquire online or contact us on 1300 889 743 and one of our specialist mortgage brokers will help you find a lender who can take bonus income into consideration when they assess your home loan application.
Which lenders can help?
Some banks tend to be better at understanding bonus income and will give a more flexible assessment of your bonus income. Enquire online or contact us on 1300 889 743 to speak to a mortgage broker that specialises in lending to people who receive regular bonuses as part of their employment package and knows which lenders can approve your loan!
Who is this loan for?
A bonus income home loan is for employees who receive regular, consistent and reliable bonuses throughout the year. The banks include the bonus income in their assessment of the home loan application where the amount of loan that they will approve may depend on these bonus figures. If you receive annual or quarterly bonuses then we may be able to get a lender to assess up to 100% of your bonus income.
Which loan types are available?
All loan types: Professional packages, basic loans, lines of credit, fixed rates.
What can I use the loan for?
Home or domestic use, investing, purchases, refinances and construction are all acceptable loan purposes.
What discounts are available?
Professional package and basic loan discounts are available.
What loan features are available?
All loan features: Interest only, fixed rate, line of credit, 100% offset, redraw, extra repayments.
Bonus versus commission income
A bonus is usually paid annually by your employer in recognition of going above and beyond performance benchmarks, personal or against others in your department, or the responsibilities set out in your position description.
Commissions, on the other hand, is not additional income but rather tied to your entire remuneration package.
The amount of commission you earn is either tied directly to hitting benchmarks set out in your employment contract or, as it pertains to a sales role, how many products you sell or services you render to clients.
Commissions form the sole source of income for many white collar professionals, with no cap on earning potential.
In other cases, your commissions are supplemented with a base salary to provide a salary buffer should you experience poor-performing months. The trade-off for the added stability is typically a lower commission rate.
Apply now for a home loan using your bonus income
Enquire online or contact us on 1300 889 743 for more information on which banks will accept your bonus income as part of a serviceability assessment. We have connections with a considerable number of banks and lenders who can provide you with a home loan at affordable rates.