When mortgage lenders assess affordability, income is one of the key factors that they use. As well as looking at the amount you earn, the lender will review how consistent your earnings are. If you have a complex income, you may have fewer mortgage deal options, but you should still be able to secure a mortgage through a specialist lender.
This blog explains how lenders assess applicants who might have a complex income and how to improve your chances of mortgage approval.
What counts as a complex income?
Complex income includes the following:
- Self-employment
- Commission-based income
- Multiple income streams
- Freelance work
- Earnings with seasonal fluctuations
- Mortgages if you’re a director of a Ltd Company
How lenders assess multiple income streams
When mortgage lenders assess applicants with multiple income streams, they will categorise the different types of income, with more weighting on the most reliable one. The primary salary will usually be fully counted, and this will be based on recent payslips.
Other income such as some freelance work on the side of your main job may be counted but only if you can prove that it is consistent and the lender may only include a percentage of this into the affordability calculations, as it is not guaranteed income.
With commission-based income, lenders will review the average amount over a period of two to three years. Many lenders will also only include a percentage of around 50% to 70% of bonuses and commission in affordability calculations but if the income is consistent over a longer period, there are some lenders who will count 100% of this income stream.
