In the competitive property market, borrowers are increasingly looking to maximise their mortgage potential. For professionals who have recently transitioned to new roles and earned substantial bonuses, the challenge lies in finding lenders who will consider this most recent bonus to boost borrowing capacity.
This case study details how Mortgage Knight assisted an employed professional in leveraging their latest bonus to increase their mortgage potential, despite industry norms favouring a two-year average for bonus assessments.
Case Study Overview
The traditional approach of most UK mortgage lenders is to average bonus income over two years, a practice aimed at ensuring income stability. However, for clients new to their roles, this can be limiting.
Mortgage Knight worked with a client in this exact position, connecting them with a flexible lender willing to consider only the latest year’s bonus. As a result, the client could secure a mortgage that fully reflected their earning power and home-buying aspirations.
Leveraging Recent Bonus Income for Enhanced Borrowing Potential
Client Background
Employment and Income Situation
The client, a finance professional with significant earning potential, had recently joined a new company. In their first year, they were awarded a substantial bonus, which they hoped to use to increase their mortgage capacity.
However, most lenders’ requirements to average bonus income over two years posed a significant challenge, as this approach did not reflect the client’s current earnings and reliable employment. The client needed a lender who would consider their latest bonus in its entirety, enabling a mortgage aligned with their true financial picture.
Challenges
Typical Lender Requirements for Bonus Income
The industry standard among UK lenders is to average bonus income over two years, viewing this as a more stable indicator of income reliability. This requirement, however, does not suit everyone—particularly those new to a job.
In this case, the client faced restrictions that would significantly lower their borrowing power, despite a strong income and secure employment. They needed a lender willing to accept their latest bonus as an accurate reflection of their income.
Mortgage Knight's Solution
Flexible Lender Criteria for New Job Bonuses
Mortgage Knight has access to a network of lenders who understand diverse income scenarios. In consultation with the client, Mortgage Knight identified a lender who was open to assessing the client’s latest bonus without requiring a two-year average.
This lender recognised that the client’s employment contract guaranteed future bonuses, thus allowing a more tailored approach that better reflected the client’s actual earnings.
Outcome
Mortgage Approval Reflecting Full Bonus Income
By partnering with a lender willing to count the full bonus from the client’s first year, Mortgage Knight enabled the client to secure a mortgage at a favourable rate and with increased borrowing capacity.
This enhanced borrowing potential allowed the client to purchase a higher-value property than would have been possible under traditional lending criteria. With Mortgage Knight’s support, the client was able to achieve their property goals with confidence and ease.
Benefits of Using Latest Bonus Income for Mortgage Approval
- Increased Borrowing Power
Including recent bonus income in mortgage calculations can significantly increase borrowing capacity, often allowing clients to access more competitive property options. - Reflects Real Income Potential
For clients in new, high-paying roles, using the latest bonus offers a mortgage amount that mirrors their current financial reality. - Access to Competitive Rates
Many lenders specialising in non-traditional income assessments provide competitive rates tailored to clients with strong earning profiles and bonus income. - Efficient Process for New Job Bonuses Flexible lenders streamline the mortgage application process for clients with recent income changes, reducing stress and ensuring clarity in the loan terms.
How Mortgage Knight Can Help You Use Your Bonus for a Mortgage?
Mortgage Knight is dedicated to helping clients who want their unique income situations—including recent bonuses—taken into account. Whether you’ve recently started a high-paying role or received a substantial bonus, Mortgage Knight can connect you with lenders who recognise and value your current earning power.
Get in touch for a free consultation, and let us help you find mortgage options that align with your financial goals.
Contact Mortgage Knight
If you’re employed and seeking a mortgage lender who will take your recent bonus into consideration, contact us today. Our team of experts is here to help you achieve a mortgage that truly reflects your financial profile.
Frequently Asked Questions
Q 1: Can I use my bonus income in my mortgage application?
Ans: Yes, many lenders will consider bonus income, though they typically average it over two years. Some specialist lenders will, however, look at the latest year’s bonus if it reflects your true earning potential.
Q 2: What if I have been in my job for less than two years?
Ans: If you have only one year of bonus income, certain lenders will consider this if you have a contract showing future bonuses. Mortgage Knight can help identify such lenders for you.
Q 3: How much of my bonus income will lenders include in the assessment?
Ans: Lenders typically consider a portion of your bonus income, often 50-100%, depending on the lender and your employment terms.
Q 4: Are there mortgage products specifically for people with significant bonus income?
Ans: Yes, some lenders offer tailored products for clients with bonus-driven income. Mortgage Knight works with these lenders to secure terms that match your financial profile.
