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Lenders Need to Start Considering Bonuses and Commission

by Sarah Halloran

Whilst many employers have been forced to cut bonuses or review commission rates, you may still be amongst the lucky few to be receiving a yearly bonus.  If you are and you are looking to purchase a new property you no doubt want that bonus to be taken into consideration when applying for a mortgage.

More than one quarter of mortgage intermediaries report that over half of their clients receive regular bonuses or commission payments that would be beneficial when making a mortgage application.  Many would prefer to use a mortgage lender that used this regular additional income to boost their affordability potential.

These findings have been released by Kensington after surveying a group of 680 mortgage intermediaries.  26% of those asked said that over 50% of their clients would want their bonus to be taken into account when calculating affordability whilst 8% said they saw fewer than one in ten clients who wanted bonus and commission income to be considered as part of their mortgage application.

Charles Morley, head of sales at Kensington, said:  ”Bonuses may have made headlines for the wrong reasons recently, but there is no getting around the fact that a huge number of workers in the UK are rewarded on performance, with regular target-related bonus or commission.

“Given that it is so integral to the workforce, it is unbelievable to think that some lenders are still reluctant to consider the full value of regular bonus or commission payments within their affordability calculations. At Kensington, however, we take an intelligent approach to lending, with experienced underwriters making pragmatic decisions based on the circumstances of real people, which is why we can consider up to 100 per cent of all regular bonus, commission or other declarable income earned.”

However, given the current economic climate it is easy to see why some major high street lenders are reluctant to consider bonuses.  Many employers are continuing to cut these payments and this could prove risky for any lender in the future.

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