Why advisors should factor in bonuses

January 26, 2020 by Brendan O'Neill

Borrowers

The affordability of housing in the UK has been an issue for several years now, but figures showing a further 2.2% increase in average prices throughout the last year brought it back into the spotlight.

Finding a mortgage that enables borrowers to buy the home they want in this market can be tough, but bonus pay is something advisors should pay more attention to.

Many people get paid bonuses and there is evidence to suggest that factoring this in could help them get a deal that allows them greater choice in the current housing market. The mortgage brokers, Private Finance, conducted research which revealed that people who get such a bonus payment can potentially borrow a maximum of £33,000 more due to this, should they be steered towards the correct deal.

The company went on to state that there is considerable variance when it comes to how much different lenders and products are affected by bonuses. In working out affordability for potential borrowers, some mortgage lenders use 50% of all bonus pay the borrower has received during the previous two years, while with others it is 100%.

It is surely the responsibility of a broker who has done CeMAP mortgage advisor training to be aware of this and direct their clients towards those deals that will help them make the most of their bonus pay in mortgage terms. After all, with house prices as steep as they are, it can mean the difference between the client being able to afford their first choice home or not.