Mortgage with Commission or Bonus Income

If a significant portion of your earnings comes from commission, bonuses, or other variable pay, you already know your income is not straightforward. The good news is that most lenders will consider this income — but how much they count varies enormously.

How Lenders View Variable Income

Lenders split your income into two buckets: guaranteed (your basic salary) and variable (commission, bonuses, overtime, shift allowances). Your basic salary is counted in full. The variable portion gets more scrutiny because it could theoretically drop to zero.

The key question for lenders is: how regular and predictable is the variable element?

• Contractual commission that forms a guaranteed part of your pay structure is treated most favourably
• Regular non-contractual commission that you have received consistently for 2+ years is usually accepted at some percentage
• Annual discretionary bonuses are treated more cautiously because your employer can choose not to pay them
• One-off bonuses (signing bonuses, retention payments) are generally not counted at all

What Percentage Do Lenders Count?

This varies significantly:

Lenders like Barclays and NatWest tend to be more generous with commission income. Others, particularly some building societies, may take a more conservative approach. The best lender for you depends on the split between your basic and variable pay.

What Evidence You Need

Lenders want proof that your variable income is real, regular, and likely to continue:

• Latest 3-6 payslips showing the commission or bonus breakdown
• P60s for the last 2-3 years showing total earnings
• Employment contract confirming the commission or bonus structure
• Employer's letter confirming the variable pay arrangement and its expected continuation
• Bank statements showing income deposits

The more years of evidence you have, the better. If you have received consistent commission for five years, that is a much stronger story than one good year.

Commission-Heavy Roles

Some professions are heavily commission-based — estate agents, recruitment consultants, car salespeople, financial advisers, and sales roles generally. If commission makes up 50% or more of your total pay, you need a lender who will count a high percentage of it.

Example: recruitment consultant

• Basic salary: £28,000
• Average annual commission (over 3 years): £42,000
• Total actual income: £70,000

With a lender counting 100% of averaged commission:

• Assessable income: £70,000
• Potential borrowing at 4.5×: £315,000

With a lender counting 50% of commission:

• Assessable income: £49,000
• Potential borrowing at 4.5×: £220,500

That is nearly £100,000 difference in borrowing capacity — enough to fundamentally change what you can afford.

Bonus-Dependent Roles

Annual bonuses are common in banking, professional services, tech, and management roles. Lenders approach these differently from commission:

• Most want at least 2-3 years of bonus history
• They typically average the bonus over those years
• Some will use the lowest of the last two years rather than an average
• A few lenders will accept the latest year only if it shows the bonus is increasing

If your bonus fluctuates significantly year to year, lenders will be more cautious. A bonus that was £15,000, then £12,000, then £14,000 shows consistency. A bonus that was £5,000, then £25,000, then £8,000 shows unpredictability.

Maximising Your Borrowing

1. Gather three years of P60s — the longer the track record, the more lenders will count
2. Get an employer reference specifically confirming the ongoing nature of your variable pay
3. Time your application — if possible, apply after a strong bonus or commission period so your latest figures are high
4. Use a broker who knows which lenders are most generous with variable income
5. Consider the timing of payslips — if your commission is seasonal, ensure your recent payslips reflect a typical or above-typical period

Overtime and Shift Allowances

While we are discussing variable income, overtime and shift allowances follow similar rules. Lenders typically want 6-12 months of evidence and will average the overtime income. Some count it at 100%, others at 50%.

If you rely on overtime to reach your borrowing target, make sure your payslips clearly separate overtime from basic pay, and that you have a consistent history of working those extra hours.

When Commission Income Falls

One concern lenders have — and one you should share — is what happens if your commission drops. If you are stretched to afford the mortgage based on a combination of basic salary and high commission, a bad quarter could leave you struggling.

Responsible borrowing means ensuring you could still meet your payments if your variable income dropped by 30-50%. Lenders stress-test for this, but it is worth doing your own calculations too.

This is educational content, not financial advice. Your situation is unique — speak to a qualified mortgage broker before making any decisions.