Bonus income can be included in mortgage affordability calculations by many lenders, but the approach varies significantly depending on whether bonuses are guaranteed or discretionary, how consistent payment has been, and how well the income is documented.
No fee for the initial consultation. A broker fee of £299 becomes payable on receipt of a formal mortgage offer if you choose to proceed. Full fee details are provided before any charge becomes due.
A bonus income mortgage is a mortgage where some or all of an applicant's bonus payments are included in the affordability assessment alongside base salary. Woodhall Mortgages is an FCA-authorised whole-of-market broker. We consider mortgages from across the market, including lenders experienced in assessing bonus income, and can help identify which lenders and approaches may be appropriate for your individual circumstances. Call 01422 354011 or use the form below.
Woodhall Mortgages is an FCA-authorised whole-of-market mortgage broker based in Halifax, West Yorkshire. Our CeMAP qualified advisers regularly work with employed applicants whose income includes bonus components, helping identify lenders suited to both guaranteed and discretionary bonus structures.
Bonus income can form part of your mortgage affordability assessment, but how lenders treat it varies significantly. We help you understand which lenders and approaches may be appropriate for your specific situation.
We explain how different lenders calculate bonus income, including 2 to 3 year averaging methodologies, and identify which approach may be suitable for your situation.
Guaranteed contractual bonuses are typically treated more favourably than discretionary bonuses. We identify which lenders take the most appropriate view of your specific bonus type and payment history.
We advise on the full documentation pack needed including payslips, P60s, employment contracts, employer letters and bank statements, and how to present your bonus history clearly.
Where your bonus has varied year to year, we help present the income pattern clearly and identify lenders whose criteria may take a reasonable view of variation within an overall consistent trend.
Where one partner earns a bonus and the other is on a standard salary, we present the combined household income clearly and identify lenders comfortable with the mixed income profile.
Lenders vary significantly in how bonus income is treated. We identify from across the market which lenders may consider your application based on your bonus type, consistency and total income profile.
As a whole-of-market mortgage broker, Woodhall Mortgages considers mortgages from across the market, subject to lender criteria and product availability. The options available depend on your individual circumstances and eligibility.
Bonus income mortgage applications vary depending on bonus type, payment history and documentation quality. These factors give a broad indication of where you may stand.
Not sure where you sit? A short call can often provide an initial steer, though a full assessment will depend on your individual circumstances and lender criteria.
Different lenders take fundamentally different approaches to bonus income. Some may include it in full where it is guaranteed; others apply a percentage inclusion rate to averaged amounts; and some exclude discretionary bonuses entirely. Understanding which approach applies to your bonus type and pattern is the key to effective lender selection.
| Bonus type | How lenders typically assess it | Key documents |
|---|---|---|
| Guaranteed contractual | Often included in full or at high inclusion rate alongside base salary where properly documented | Employment contract confirming bonus, payslips, P60, employer letter |
| Discretionary (consistent, 3 years) | Averaged over 2 to 3 years; percentage inclusion rate applied by many lenders; some include in full | 3 years of payslips and P60s, employer letter confirming scheme, bank statements |
| Discretionary (variable) | Averaged with conservative weighting; some lenders use the lowest year only; some exclude entirely | 3 years of payslips and P60s, employer letter explaining variation, context documentation |
| Quarterly bonus | Annualised from quarterly payslips; typically averaged across the most recent 12 months | 12 months of payslips showing quarterly payments, P60, employer letter |
| Commission with bonus element | Total variable income (commission plus bonus) assessed together by most lenders | Payslips, P60, employer letter confirming income structure and basis of variable pay |
An employer letter for a bonus income mortgage application should confirm: whether the bonus is guaranteed or discretionary, the basis on which the bonus is paid (individual performance, company performance or contractual), the typical frequency and approximate amount, and an indication of whether the scheme is expected to continue. Where bonuses have varied, an explanation of the reason is useful. Woodhall Mortgages can advise on exactly what to ask your employer to include.
The table below shows illustrative examples of how bonus income may affect assessed income and indicative borrowing capacity. Figures are illustrative only and assume a 75% inclusion rate on averaged bonus. Actual inclusion rates, income multiples and borrowing capacity vary by lender and individual circumstances. Not a quotation or offer of lending.
| Base salary | Average annual bonus | Illustrative assessed income (75% inclusion) | Indicative borrowing range (4 to 4.5x) |
|---|---|---|---|
| £35,000 | £8,000 | £41,000 | £164,000 to £184,500 |
| £42,000 | £11,000 | £50,250 | £201,000 to £226,125 |
| £45,000 | £15,000 | £56,250 | £225,000 to £253,125 |
| £55,000 | £20,000 | £70,000 | £280,000 to £315,000 |
| £65,000 | £30,000 | £87,500 | £350,000 to £393,750 |
Where a bonus is guaranteed and fully included, assessed income and borrowing capacity may be higher. All lending is subject to status and a full affordability assessment. Income multiples are used as a guide only by many lenders.
The strength and completeness of your documentation is one of the most important factors in how lenders treat bonus income. A well-prepared pack avoids delays and gives lenders confidence in the income figures presented.
Showing bonus payments across multiple years. Lenders need payslips to verify the pattern of bonus receipt and calculate an averaged figure.
Summarising total annual income including bonuses. P60s provide a clear year-end figure that lenders cross-reference against payslips.
Where the bonus is guaranteed and written into the contract. This is the key document for guaranteed bonus applications and may significantly affect how the income is treated.
Confirming the bonus scheme, basis of payment, typical amounts, frequency and whether the scheme is expected to continue. Particularly important for discretionary bonuses.
Showing actual bonus receipt matching the payslip figures. Lenders may request 3 to 6 months of statements to verify the pattern of income deposits.
Proof of identity, address and deposit source. The same as for any mortgage application, alongside the bonus-specific documentation.
The following examples are purely illustrative. They are not representative of typical outcomes and should not be relied upon as an indication of success. Actual outcomes depend on individual circumstances, lender criteria and current market conditions.
Scenario: Applicant aged 34 in financial services. Base salary £45,000 plus guaranteed contractual bonus of £15,000 (£60,000 total). Target property £265,000 with a 10% deposit, requiring approximately £238,500.
What may have helped: Employment contract specifying the guaranteed bonus, 3 years of payslips showing consistent £15,000 annual payments, employer letter confirming the contractual obligation and an aligned P60.
Illustrative outcome: In this scenario, a lender may have considered the full guaranteed bonus in the affordability assessment, giving an assessed income of £60,000. Actual rates and outcomes vary significantly.
Scenario: Applicant aged 38 in sales. Base salary £42,000 with discretionary bonus history: Year 1 £8,000, Year 2 £11,000, Year 3 £13,000 (£10,667 average). Target property £235,000 with a deposit.
What may have helped: Three years of payslips and P60s showing the rising bonus pattern, an employer letter explaining the performance scheme, and bank statements confirming receipt. The rising trend supported the case for the averaged figure.
Illustrative outcome: In this scenario, a lender may have applied a partial inclusion rate to the averaged discretionary bonus. The rising trend may have supported a more favourable assessment than a flat or declining pattern. Actual outcomes vary.
Scenario: Couple purchasing together. One partner: base £38,000, no bonus. Other partner: base £35,000 plus bonus averaging £18,000 annually (£53,000). Combined income approximately £91,000. Target property £315,000.
What may have helped: The bonus-earning partner provided 3 years of bonus documentation and employer confirmation. The non-bonus partner provided standard employment verification. The combined household income was presented clearly to the lender.
Illustrative outcome: In this scenario, a lender willing to include a proportion of the averaged bonus income may have considered the combined household income favourably. Actual treatment of bonus income and overall outcomes vary by lender.
Call 01422 354011 or use the form below. No fee for the initial conversation.
Discuss Your Bonus IncomeWe assess your bonus type, payment history and documentation before identifying lenders from across the market who may consider your application.
We discuss your base salary, bonus type, payment history and how the income is documented. No cost for this initial discussion.
We identify the full documentation set and lenders from across the market whose approach to bonus income may suit your situation.
Any mortgage recommendation is provided only after a full regulated advice process. We support you through the application to offer.
Reviews reflect individual experiences and do not guarantee similar outcomes. We do not select or filter reviews. We do not control the content of third-party review platforms.
Call 01422 354011 or use the form below for a free initial conversation.
No fee for the initial consultation. A broker fee of £299 becomes payable on receipt of a formal mortgage offer if you choose to proceed. Full fee details are provided before any charge becomes due. We may receive commission from lenders. Your home may be repossessed if you do not keep up repayments on your mortgage.
Get Bonus Income Mortgage AdviceWoodhall Mortgages is authorised and regulated by the Financial Conduct Authority (FRN 762513). Woodhall Mortgages is a whole-of-market mortgage broker. We consider a comprehensive range of mortgages from across the market, but not all lenders or products may be included. A broker fee of £299 becomes payable on receipt of a formal mortgage offer if you choose to proceed. Full fee details are provided before any charge becomes due. We may receive commission from lenders; this does not affect the advice you receive. This page contains general information only and does not constitute regulated mortgage advice. Your home may be repossessed if you do not keep up repayments on your mortgage. Last reviewed: May 2026. Woodhall Mortgages, Croft Myl, West Parade, Halifax, HX1 2EQ.
Buying a home or reviewing your mortgage can feel complicated, but it doesn’t have to be. A quick conversation can give you clarity on your options, your budget, and the next realistic steps. There is no obligation and no pressure, just straightforward guidance tailored to you. Complete the short form below and we will be in touch to help you move forward with confidence.
Your home may be repossessed if you do not keep up repayments on your mortgage. Think carefully before securing other debts against your home.
Woodhall Mortgages Ltd is authorised and regulated by the Financial Conduct Authority under reference number 762513.
