Complex Income Mortgage
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I am an expert in: Complex Income Mortgage
Meet the Author
I am an expert in: Complex Income Mortgage
Complex Income Mortgage
Adam Nunn and Jon Porter explain how complex income works when applying for a mortgage.▶ Load podcast player
What is considered as complex income for mortgage applications in the UK?
It’s obviously quite broad, but, typically, this means types of income that may be non-guaranteed. It could be temporary contracts, training contracts, or stipend income if you’re a trainee doctor or you work for the clergy. It could be foreign income, second jobs, zero-hour contracts or benefits. It’s anything with less certainty around it or that has an end date.How do lenders assess different complex incomes? How do they impact the mortgage assessment process?
The key thing is the history of that income – lenders will want to know how long you’ve been receiving it. It differs from lender to lender on how much they will use, whether that’s 100% of an income or a proportion of it. It can also depend on the future of that income.What documentation and evidence do I need to provide to prove my complex income?
The more history you’ve got, the better. If you’ve had multiple temporary contracts and your latest one has just been renewed, that’s helpful. If there’s an end date to your contract, there will be questions around that – they might ask for evidence of renewal. There’s no definitive list of what’s required, but the more background, history, explanations and documents you have, the better. Ultimately, you’re building a picture for that lender to decide whether they’re willing to lend against that income. Are they happy to take the risk?What challenges might arise during the mortgage application process when declaring complex income?
Underwriters are going to have more questions if the income is complex. If you don’t have standard monthly wage slips, how do we evidence the income? It’s also demonstrating history within your field. You may need to provide references from your employer or agency, or evidence of your employment continuing if you’re under a temporary contract. Will it be renewed or will you be seeking a new employer? These are all the things lenders will want to know. Dates are key, together with documentation for all the income. Try and provide as much as you possibly can, because the underwriters are going to ask questions on it.Speak To an Expert
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How do I improve my chances of getting approved for a mortgage with complex income?
Documentation is key. If you’ve had multiple jobs, make sure you’ve kept a good track record of the payslips and contracts. The admin around your employment is critical. Talk to a broker, because, in most cases, complex income might take a bit of planning. If you’re thinking of buying a property in six months’ time, don’t wait – speak to us as soon as possible. We can then put a plan in action for you.Do many mortgage lenders specialise in mortgages for customers with complex income?
There’s no one lender in particular specifically for complex income, but some of the smaller building societies might have a better understanding. They often underwrite each individual case. Where you can demonstrate the history and future of your income, we can present that to lenders. We have good relationships with certain lenders and can discuss non-standard, complex incomes and see if those can be taken into consideration. Speak to us and see what we can come up with for you.How can I calculate my borrowing capacity when I have complex income? Does it differ from regular income?
Yes, it differs. If you’re earning a set salary and you’ve got a permanent contract, a few months’ payslips can evidence that very clearly. Lenders will generally consider lending around 4.5 times that income. But with complex income you’re not going to have the same result. You might be paid in dollars – and that complexity can reduce the amount you can borrow. With certain complex incomes, lenders might consider it, but they might only take 50% of it, or another proportion. It’s going to be harder to calculate your exact borrowing capacity – but that’s not your job, it’s ours. Where you’re not sure, speak with a mortgage broker. We can advise you as to the calculations being used, and whether you need one year’s history, two years’, or if the lender just takes a three-month average. We confirm what your ultimate borrowing capacity is.How can a mortgage broker help?
The sooner you speak to a broker, the better. We can give you guidance – even if we can’t do anything straight away, we could perhaps get you a mortgage in three, six or 12 months’ time. By preparing, you will know what’s possible now and in the future. We had a client recently who went to a bank and was told that they couldn’t get a mortgage with their complex income. They then went to an estate agency broker, who also said they couldn’t do it. They came and saw us, and we got them a mortgage.Key Takeaways:
- Complex income is typically defined as non-guaranteed earnings, such as temporary contracts, stipend income, foreign income, zero-hour contracts, and benefits.
- When assessing complex income, lenders prioritise the history and future certainty of the earnings and may only use a proportion of that income when calculating your borrowing capacity.
- Providing comprehensive documentation, including a good track record of all payslips, contracts, and detailed explanations of your employment history, is essential for underwriters.
- Calculating your exact borrowing capacity is more difficult than with a standard salary, and complex income can reduce the amount you are able to borrow.
- It is highly recommended to speak with a mortgage broker as early as possible, even six to twelve months before planning to buy, to create an effective plan and increase your chances of approval.
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