Getting a mortgage with complex income

Getting a mortgage when your income varies can be tricky.

Banks and other lenders usually prefer stable, predictable incomes because it helps them feel confident that you’ll be able to pay back the loan. If your income doesn’t fit into a neat box, you might find it harder to get a mortgage.

But don’t worry, it’s not impossible.

In this article, we’ll explore what complex income is, why it can make getting a mortgage more challenging, and how you can improve your chances of getting your mortgage application approved.

Whether you’re a freelancer, have multiple income sources, or earn in a way that’s not regular, this article is here to guide you through your mortgage journey.

Complex income explained

When you’re applying for a mortgage, lenders look at your income to decide if you can afford the loan.

Most of the time, they like to see income that’s easy to predict, like a regular salary from a job. But not everyone has this kind of income. That’s where the term ‘complex income‘ comes in.

What Counts as Complex Income?

Complex income includes any money you earn that doesn’t come in a regular, predictable way. Here are some examples:

  • Bonuses and Commissions: Money you earn on top of your basic salary, like sales commissions or yearly bonuses.
  • Self-Employment Income: Earnings from running your own business or working as a freelancer.
  • Rental Income: Money you get from renting out a property.
  • Overtime and Shift Allowances: Extra pay for working additional hours or specific shifts.
  • Benefits and Child Support: Government benefits or money received for child support.

Why is Complex Income a Challenge for Mortgages?

Lenders find complex income hard to deal with because it can go up and down.

Unlike a steady salary, this kind of income can change from month to month or year to year. This makes lenders nervous because they’re not sure if you’ll always have enough money to make your mortgage payments.

But here’s the good news: Having complex income doesn’t mean you can’t get a mortgage. It just means you might have to provide more information and look for a lender who understands your situation.

How Lenders View Complex Income

When you apply for a mortgage with complex income, understanding how lenders see things can really help.

Let’s talk about what lenders think when they look at complex incomes and how you can show them that you’re a good person to lend to.

Lenders mainly want to be sure that you can keep up with your mortgage payments. With complex income, they might worry that your earnings could change a lot, making it hard to pay back the loan.

Every lender has their own way of deciding if lending to someone is risky. Complex incomes can be seen as more unpredictable, so some lenders might be hesitant.

Finding the Right Lender

Not All Lenders are the Same: Some lenders are more understanding about complex incomes than others. It’s important to find one that knows how to handle your specific income situation.

Specialist Lenders: There are lenders who specialise in mortgages for people with complex incomes. They’re often more flexible and understand that not everyone has a regular salary.

The Role of Mortgage Brokers

A mortgage broker who knows about complex incomes can be a big help. They can find the right lender for you and give advice on how to strengthen your application. They can also help you present your income in the best way to show lenders that you’re able to pay back the mortgage.

Proving Your Income

Proving your income can be a bit more work than for someone with a regular salary. Here’s how you can go about it:

Essential Documents for Proving Complex Income

  • Payslips and P60s: If you’re employed and receive regular or irregular bonuses, you’ll need your payslips and your latest P60.
  • Tax Returns: For self-employed individuals, your tax returns (SA302 forms) are essential. They show your income over the last few years.
  • Bank Statements: These help to show your regular income and any additional earnings like rent or dividends.
  • Proof of Additional Earnings: If you have other income sources, like rental income or dividends, you’ll need documents to prove these too, like rental agreements or dividend statements.

Tips for Organising Your Documents

  • Be Thorough: Make sure you gather all the necessary documents. Missing information can slow down the process.
  • Stay Up-to-Date: Use the most recent documents available. Lenders want to see your current financial situation.
  • Clear and Consistent: Ensure that your documents are easy to read and consistent. They should clearly show where your income comes from and how much you earn.

Mortgage Affordability

All lenders will now assess your affordability as well as your income. This means they want to see how you spend your money.

You can use our affordability calculator to see how your spending affects the potential size of mortgage you could get.

The Value of Expert Mortgage Advice

When you’re trying to get a mortgage and your income isn’t straightforward, talking to a mortgage expert can really help.

These specialists understand the unique challenges that come with complex incomes and know what lenders are looking for. They can guide you to lenders who are more likely to accept your kind of income and help you put together an application that shows your financial strengths in the best light.

One of the biggest benefits of working with a mortgage adviser is their deep knowledge of the market.

The world of mortgages can be confusing, but advisers know it well and can steer you toward the best options for your situation. They’re also great at helping you get your documents in order. They know exactly what you need and the best way to present it, which can make your application process smoother and more likely to succeed.

Another advantage is that they have direct communication lines with lenders.

This can be really helpful if there are any issues or questions about your application. They can talk to the lenders for you, clarifying things and possibly speeding up the whole process.

Solutions for expats

Getting a mortgage as an expat can be frustrating. While you may not feel that your income situation is ‘complex’, the fact that it is earned outside of the UK and possibly not in sterling does add complications.

This necessarily means a reduced number of lenders to approach and different lending criteria.

You will definitely benefit by working with an independent mortgage broker such as ourselves. And we can help with residential mortgages, buy to let mortgages, expat holiday let mortgages, bridging and commercial finance.

Impact on Rates

When you have a complex income, it can have an effect on the terms and rates of your mortgage. 

Firstly, the type and stability of your income can influence how lenders see you as a borrower. If your income is unpredictable, lenders might see this as a higher risk.

This doesn’t mean you won’t get a mortgage, but it might affect the terms they offer. For example, you might see higher interest rates or different conditions compared to someone with a steady income.

There are ways to work with this situation.

One of the best things you can do is to show a strong financial history. If you can demonstrate that you’ve managed your income well over time, paying bills and saving money, this can reassure lenders.

It’s also about finding the right lender. Some are more experienced with complex incomes and might offer better terms if they understand your financial situation.

Another important aspect is the timing and consistency of your income. If you have a good track record over several years, even with a complex income, this can work in your favour. It shows lenders that, despite the complexity, your income is reliable in the long term.

Remember that every lender has different criteria. What one lender sees as too risky, another might be fine with. That’s why exploring different lenders, possibly with the help of a mortgage adviser, can make a big difference.

How we can help

At Drake Mortgages, we understand that everyone’s financial situation is unique, especially when it comes to complex incomes. That’s why we take the time to really get to know your mortgage goals, ensuring we find the most suitable mortgage deals for you.

Our expertise in mortgage advice is unmatched.

We carefully guide you through the various mortgage rates available, aiming to find the one that fits your circumstances best. Our goal is to help you borrow effectively and support you through the entire duration of your loan.

With Drake Mortgages, you’re more than just a transaction; you’re a valued client. Our experienced team approaches every case with empathy and understanding, not relying on impersonal algorithms but on genuine human insight.

We pride ourselves on having access to competitive mortgage deals, and importantly, we maintain our independence with no ties to third parties.