100% of commission and bonuses taken into account in affordability calculations for home purchase

A married couple approached us looking for a mortgage so they could buy a 4-bed detached house in Kent. Both husband and wife are in full-time employment; the wife works as a marketing executive and the husband is a salesman. As well as their full-time jobs, the couple earn income from renting out two flats which they own (with a buy to let mortgage) in Canterbury. 

The couple had tried going to lenders directly but had struggled to get a mortgage offer for two main reasons:

  1. The husband's work earnings are in the form of monthly commission and quarterly bonuses only. The fact that he does not receive a basic salary can be a sticking point with many lenders who will not assess affordability based on 100% of commission or bonus payments. 

  2. In order to achieve the loan amount they wanted, the couple also needed to have the income from rent taken into consideration, which not all lenders will accept. Added to this, the couple could not provide a recent SA302 (a statement of earnings from HMRC) showing the income from their rental properties.

We approached a high street bank which we knew would take a common sense approach. Normally, this lender will only take into account income from rent if the rental property is owned outright. As this was not the case, we negotiated with underwriters who agreed to lend enough to help them buy the house and enough so that the couple could pay off their buy to let mortgage.

In order to protect themselves against future rate rises, the couple chose to fix their mortgage for five years on the following terms: 

Property value: £730,000

Loan amount: £405,000

LTV: 55%

Rate: 1.99% 5 year fixed

Term: 23 years capital & interest

Lender arrangement fee: £999

Mortgage payment: £1,834 pcm

Consultant: Gavin Richardson, 01732 471 613

 

ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

 

This is just one example of how we have helped secure finance for a client, if you have a similar scenario or something you'd like us to look at please get in contact with us on 0345 345 6788 or contact me directly at gavinr@mortgagesforbusiness.co.uk.

Consultant