Add Up Your Bonus Income When Applying For Your Home Loan

If you are looking into bank loans you probably wonder which parts of your income will be considered. For the lender, assessing the amount of money that each borrower earns can be tricky. They want to be able to give you a mortgage, but they also do not want to take too much of a risk. Borrowers who have a significant part of their income coming from bonuses face a unique situation because that added amount could greatly impact the amount of money they can get as well as the terms of their mortgage. Before you submit your application for a you should clarify what bonus category your income falls into and whether or not a typical lender would take it into account.

Bonuses and Home Loans

The one off bonus - If you receive a one off bonus it is typically not going to be considered part of your income. They will use a that only takes into account your actual, regular salary each year.

The irregular bonus - An irregular bonus is one that is not given at consistent intervals now based on meeting specific goals. It can be incredibly difficult for a lender to figure out how to include these in your income, but some are willing to try. These bonuses are usually included on an individual and case by case basis.

The performance based bonus - As the name states, this bonus is given based on performance. Employees who meet sales quotas or other goals are usually guaranteed this type of money. Lenders will sometimes take them into account if you can prove that your receive them on a regular basis over a significant time period.

The annual bonus - Many employers hand out a yearly bonus that can be included in your salary. If you can provide documentation that you have gotten the bonus for at least two years there is a good chance that the full amount of your annual bonus will be considered part of your salary. Those who have annual bonuses can usually borrow up to ninety percent of the value of their property.

The quarterly or monthly bonus - This is probably the easiest type of bonus to have considered part of your salary. Usually the full amount of the bonus is taken into account as long as you have a letter from your employer stating the bonus is regular and continuous. If you have two years of proof that you have earned this bonus you should be able to borrow up to ninety five percent of the property value.

In any of these cases you will need to provide solid documentation of your bonus income. To increase your chances of getting the mortgage you want, try to provide as many pieces of income documentation as possible. Acceptable items include payslips from at least two consecutive pay periods, a letter from your employer that confirms the bonuses, and your most recent tax return or group certificate.

Loans are not easy to get anymore. Banks all over the world have gotten more strict with their policies and with whom they are willing to do business. You have to put your best foot forward on your application which means ensuring that every dollar of your income is counted. It is up to you to find the best rates and the best lender who will accept all of your regular and bonus income. Take the time to gather up all the appropriate paperwork so that your lender knows they can count on you and your income to repay the mortgage.

William Eve

Home Loan Finder