When you’re applying for a mortgage in the UK, understanding what counts as income is essential. This is especially true if you receive commission payments as part of your earnings. You might be wondering, do mortgage lenders include commission income? This blog post will explain how lenders view commission income, how it impacts your mortgage application, and what you can do to improve your chances.
Whether you’re applying for a residential mortgage, a buy-to-let mortgage, a fixed-rate or a variable-rate mortgage, knowing how lenders assess your income can help you plan better.
What Is Commission Income?
Commission income is money you earn based on sales or performance. For example, if you work in sales or certain service roles, part of your pay might come as a percentage of what you sell rather than a fixed salary.
Commission payments can vary from month to month, making them a bit trickier for lenders to assess compared to regular salaries.
Do Mortgage Lenders Consider Commission Income?
The Simple Answer: Yes, but with conditions
Most UK mortgage lenders will consider commission income when assessing your mortgage application, but they look at it differently from regular salary income. The main focus is on how consistent and reliable your commission earnings are.
Lenders want to be confident that you’ll continue to earn similar commission income during the mortgage term. Because commissions can be unpredictable, lenders usually ask to see evidence of your income over time.
How Lenders Calculate Commission Income
1. Time Period Checked
Lenders typically review your commission income over the last two to three years. The longer the time frame, the better it appears to lenders because it shows consistency and reduces risk in their eyes.
For example, if you earned commissions worth:
- £20,000 in Year 1
- £22,000 in Year 2
- £19,000 in Year 3
Lenders usually calculate an average to include as part of your income.
2. Evidence Required
To prove commission income, you usually need:
- Payslips showing breakdown of earnings, or
- A P60 form (summarising your income and tax paid for the year), or
- SA302 tax calculation forms if you’re self-employed or filing self-assessment tax returns.
The clearer and more extensive your commission income records, the stronger your mortgage application will be.
3. Type of Commission Income
Lenders prefer commission income linked to sustainable and reasonably stable industries. For instance, if your commission is tied to a booming sector or guaranteed contracts, that can work in your favour. Conversely, if commission income is from a sector facing uncertainty, lenders may be cautious.
How Commission Income Affects Different Mortgage Types
| Mortgage Type | How Commission Income Is Considered |
|---|---|
| Residential Mortgages | As long as you can prove steady commission over multiple years, your income will be accepted alongside your regular salary. |
| Buy-to-Let Mortgages | Your total income, including commissions, still matters if you are using personal income to qualify or support the application. |
| Fixed vs Variable Rate Mortgages | The type of mortgage interest rate generally does not affect whether commission income is counted. |
Residential Mortgages
For residential mortgages, lenders are quite familiar with applicants who have commission income. As long as you can prove steady commission over multiple years, your income will be accepted alongside your regular salary.
Example:
Jane is applying for a residential mortgage on a flat in Manchester. She earns a salary of £30,000 and typically gets £8,000 in commission each year from her sales role. She provides two years of payslips and P60s showing consistent commission. The lender averages her commission over two years and considers £4,000 per year (half the average) as part of her income for affordability checks.
Buy-to-Let Mortgages
Buy-to-let (BTL) mortgages are different because lenders focus more on the rental income rather than your personal income. However, your total income, including commissions, still matters if you are using personal income to qualify or support the application.
Some lenders have strict rules about commission income for BTL because they want to see a stable income to cover mortgage payments if rental income drops.
Example:
Tom applies for a buy-to-let mortgage but also wants to demonstrate his personal income. He earns £15,000 in commission yearly as a car salesperson. His lender reviews his tax returns for the last three years and uses an average of his commission income to assist in assessing his affordability.
Fixed vs Variable Rate Mortgages
The type of mortgage interest rate (fixed or variable) generally does not affect whether commission income is counted. Lenders use the same income assessment process regardless of rate type.
However, with variable mortgages, your payments can rise if rates increase, which is why lenders thoroughly assess your income, including commission, to ensure you afford any payment hikes.
What If Your Commission Income Is New?
If you have just started earning commission or your commission history is less than two years, some lenders may not include it or might apply a discount to the amount they count. This is to protect themselves against income fluctuation risks.
In such cases, providing additional proof like contracts, future earnings statements, or a letter from your employer can help strengthen your case, but it’s always on a lender-by-lender basis.
Tips for Mortgage Applicants With Commission Income
- Keep good records: Save payslips, P60s, and tax documents that show commission income separately.
- Show consistent earnings: Lenders like to see stability or growth in commission payments.
- Consider a broker: Mortgage brokers like BSL Financials can help find lenders who are friendly to commission earners.
- Be realistic: Don’t overestimate commission income in your application; lenders may take a conservative average.
- Plan for affordability: Make sure you can afford repayments even if your commission income drops.
Summary
Yes, most UK mortgage lenders do include commission income when assessing affordability, but it’s not counted the same way as regular salary. They usually require at least two years of evidence and average the commission over time. The more stable and consistent your commission earnings are, the better your chances of lenders recognising it fully.
For residential mortgages, commission income can be a straightforward part of your income, but it’s slightly more complex with buy-to-let applications or if your commission history is short.
Understanding how lenders view commission income can give you confidence and help you organise your mortgage application better.
If you’re earning commission and planning to apply for a mortgage—whether it’s your first home, a buy-to-let investment, or switching to a fixed or variable-rate mortgage—getting advice can make a big difference.
Speak to BSL Financials for Expert Mortgage Guidance
At BSL Financials, we specialise in helping people with all sorts of incomes, including commission-based earnings. Our mortgage advisers can guide you through which lenders are most flexible with commission income, what documentation you need, and how to maximise your chances of approval. We offer clear, honest advice tailored to your situation.
Contact BSL Financials today to discuss your mortgage options or book a free consultation. Let us help you make your next move with confidence!
Disclaimer: This blog post is for informational purposes only and does not constitute regulated financial advice. Always consult a qualified mortgage adviser before making decisions.
