Mortgage with Non-Mainstream Income
Mortgage lenders tend to prefer applicants with stable, steady PAYE employment. However, millions of people earn variable revenue and might have multiple different lines of work!
Some of the examples of non-mainstream income include:
- Pay as a trainee or apprentice.
- Bursaries.
- Dividend income.
- Self-employed people and business owners.
- LLPs and partnerships.
- Income from trusts.
- Part-time, temporary and zero-hours workers.
Other mortgage applicants earn a salary, but most of their income is from bonuses and commissions.
This guide will explain how non-mainstream income mortgages are calculated and where to find the best deals.
For more help with your mortgage application or to compare the best rates on the market, contact business finance broker on 0330 304 3040 or drop us a message at [email protected].
How Do Mortgage Lenders Evaluate Different Types of Work?
The stability of your employment will make a big difference to your mortgage application. Some of the most common working situations include:
- Self-employed applicants can have varied income, a mixture of contracts and ad hoc work. This category includes freelancers, contractors, gig workers and company directors.
- Professionals such as doctors and architects are often self-employed and may earn less as a junior, increasing substantially with professional experience.
- Workers in a new role can also find it tricky to get a mortgage, as most lenders want to see at least three months of payslips.
- Zero hours employees have the challenge of not being able to guarantee their income. Specialist lenders can help in this scenario.
- Part-time workers also have a challenge to prove affordability - although if you have a good deposit and can provide your income will cover the mortgage payments, you will usually find a competitive loan.
- Temporary employees will need to demonstrate that they will keep up with the mortgage payments when their current contract ends.
- Fixed income applicants might earn income through a pension scheme, for example, and the appetite for a mortgage will depend on the lender's risk profile.
Still, more examples of non-mainstream income include:
- Bonds and government bonds.
- Disability pensions.
- Loan stocks.
- Fixed interest securities.
Your chances of mortgage approval depend on:
- How much you earn.
- Your credit history.
- How much you want to borrow.
- The deposit you have available.
For disability benefit recipients, you will usually find a fixed-income mortgage, as several lenders will accept this form of income.
In some cases, the lender will only include 75% of your annual income to offset any risk that your earnings will drop.
