Bonus Income Home Loan
YES, Some lenders accept bonus income!
A bonus is basically income that is not part of your regular monthly salary. Many employees receive end of year bonuses or quarterly bonuses that do not form part of their ongoing pay. The bonus may be offered as a reward to an employee who consistently satisfies the Key Performance Indicators (KPIs) within a certain time frame.
Alternatively, where an employee completes a set task in a highly impressive manner, their employer may reward them with a bonus.
Will my bonus income be included?
Each lender will assess bonus income in accordance with their lending policy. Some banks take a more flexible approach, regarding bonuses as a stable form of earnings.
It largely depends on how regular the bonus payments are received:
- Monthly or quarterly bonuses: One of our lenders can accept 100% of your bonuses if they are paid regularly and you can provide a letter from your employer confirming that they are regular and ongoing. In this case, you can borrow up to 90% of the property value if you have a minimum three month history of receiving bonuses and up to 95% if you have a two year history of bonus income.
- Annual bonuses: One of our lenders may accept 100% of your annual bonus! However, you will be required to supply them with 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 can be included depending on how regularly you have received them in the past & 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.
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.
How much can I borrow?
You can borrow up to 90% of the property value, and up to 95% if you have been receiving your bonuses for two years or more. All 95% home loans are approved on a case by case basis.
What can I use the loan for?
Home or domestic use, investing, purchases, refinances and construction are all acceptable loan purposes.
Professional package and basic loan discounts are available.
All loan features: Interest only, fixed rate, line of credit, 100% offset, redraw, extra repayments.
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.