Commision & Mortgage

tomryan89 · 11 March 2017 at 5:22PM

Hi - wondering if anyone has guidance on commision as income? This is paid monthly so I believe it would be classed as "secondary income" but unsure of how that affects the amount we can borrow.

My partner earns a salary of £27,500 a year. Simple.

I earn £35,000 basic salary and £4,800 car allowance per year. I also get paid commision monthly - I've worked fo the same company for 4.5 years since joining straight university.

May 2016 I started in a new role that pays commision on top of the salary described above, it takes a bit of time to build up to a decent amount but I'm now starting to see good commission payments. Obviously, it's still a bit up and down as that is the nature of the job.

Last three months commision before tax: £125, £1,898, £1,996.

We want to buy a house for £495,000 and after selling our current property we should have £140,000 deposit.

We don't have any debt bar about £600 on a credit card. No monthly commitments like a car or loans or kids. For what it's worth, Expirian tell me I have an excellent credit score.

Probably applying through Santander so we don't have to pay an early repayment charge.

Please oh great strangers of the internet tell me if our dream home is within reach?

tomryan89 · 11 March 2017 at 5:31PM

Should probably have mentioned we are looking at a mortgage with a 35 year term

ACG · 11 March 2017 at 5:33PM

You may want to check their affordability calculator. I think it will be very tight even if you assume they will use £1900 x 12 as your bonus income.

I think at this stage your priority should be checking affordability rather than narrowing down to a specific lender as I think it will be tight.

tomryan89 · 11 March 2017 at 5:44PM

Oh dear I didn't think it would be that tight !

I looked at it like this:

- my salary: £40,400 + average of last three months commision x 12 (£16,076) = £56,476
- partners salary: £27,500

Combined income = £83,976

Max mortgage = £83,976 x 4.5 = £377,892 which is more than the £355,555 we need.

Have I misunderstood how this works ?

Thrugelmir · 11 March 2017 at 6:02PM

Do you require a car to perform your job, i.e. to travel to customers?

tomryan89 · 11 March 2017 at 6:04PM

No I work from home and if I leave the house to see a customer then work pay all expenses.

I do have a car but I bought it with cash a few year ago.

ACG · 11 March 2017 at 6:05PM

No, but you are assuming they will do 4.5x income.
4.5x income is where most lenders top out. It does not mean they will all lend 4.5x income for everyone. Some may deduct pension payments or student loan payments, some may not even lend 4.5x income.

I have no idea whether or not Santander will lend you what you need, which is why I suggested you check. Better to know now if you are going to have to fork out for an ERC rather than leaving it until you are ready to make an application.

https://www.santanderforintermediaries.co.uk/calculators-and-forms/affordability/

On a side note, I have just checked and it appears Santander work off the lowest of the last 3 bonuses and multiply by 12. Assuming you can afford to wait until your next payslip then it may be worth holding off.

tomryan89 · 11 March 2017 at 6:20PM

Thanks for your advise by the way! I do really appreciate your time.

So I did the calculator you linked - it's comes out saying they would lend us up to £379,000!

I was actually reading the guidance provided with that calculator in terms of commision income evidence - it wasn't clear to me what would would be classed as primary income secondary income. Any ideas?

tomryan89 · 11 March 2017 at 6:23PM

From the calculator : Monthly net income from all sources based on our calculation £2,523 £1,562 Total monthly net income from all sources based on our calculation £4,084

ACG · 11 March 2017 at 6:41PM

I do not use Santander very often so I am not 100% on their processes to be honest.

If in doubt, speak to the lender. If I am in doubt about anything I call my account managers. Half my week is spent on the phone checking things.

Commision & Mortgage

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