Case study: Commission-based earnings
Through one of our local estate agency contacts we were asked to contact their clients who were struggling to arrange a mortgage on their purchase. They had spoken to their own bank and one of the UK’s leading mortgage brokers but on both counts had been told that a mortgage was not possible for the amount required. The main earner worked in IT sales and whilst he received a very good basic income, approximately half of his overall income was made up of regular commission. He and his partner also had a large amount of unsecured credit commitments used to help fund previous home improvements and whilst they intended to clear the majority of their credit card balances from their sale proceeds, most lenders will not exclude these from their affordability calculations.
However, using our extensive knowledge of the market we were able to find a high street lender that would use 100% of the client’s regular commission on top of the basic salary. We suggested to the client that they borrowed more on the mortgage and used more funds to clear all the credit card commitments. This freed up more net income in the lender’s affordability calculations and enabled their mortgage to be agreed. The end result was a 5 year fixed rate mortgage at 3.35%. (APR 3.8%, the overall cost for comparison. The actual rate available will depend on your circumstances. Ask for a personalised illustration.)
For full details of how Marchwood IFA’s independent mortgage advice service works and the basis on which it receives payment for that service, please visit the main mortgage page.