In particular we focus on getting the loan structure right the first time, choosing which lenders to use in the right order (yes this is important) and finally getting our clients the best deal possible.
Yes you can still get a home or investment loan approved if you receive a significant part or all of your salary as commission income. Lenders have different methods of calculating what portion of your commission income they will accept if any. This is where our knowledge of lender policy can help you to secure the loan you're after.
General acceptance of commission income
Nearly all lenders will accept commission income however the devil is in the detail and it very much depends on the lenders policies and verification requirements as to what will be deemed acceptable income.
If you are receiving fairly consistent commission income at least quarterly and have been for at least 12 months we will be able to find a lender to accept 100% of your commission income. There are also options for those employed as little as 3 months in their current position.
If your commission is “lumpy” or is paid sporadically we may have to go back 12 months or more to establish a pattern that a lender is comfortable with.
Commission income policy if employed less than 12 months
We have a few lenders who will accept an annualised estimate of income including commission income for someone who has only been in their job for 3 months (rather than the traditional minimum of 12 months). This policy is very generous and was probably designed more for overtime and shift loading income but the policy does apply for commission sales people.
To utilise this policy you would have to provide your 2 most recent payslips with a year to date figure that is fairly consistent with the current earnings once both figures are annualised AND the date on the latest payslip must be after the end of September each new financial year so that a minimum of 3 months earnings can be verified.
Commission income policy if employed > than 12 months
This is fairly straightforward to get approved and you would have a number of lending options available (as long as current income is similar to the previous year’s earning). Most lenders have a 12 month policy for commission income. The usual way for a lender to verify commission income would to take the lower of the last year’s payment summary amount or the annualised year to date (YTD) figure from the latest payslip.
Some lenders may still want to treat you as if you were self employed and average your income over the last 2 years. But they are in the minority.
Common industries where commission income is prevalent
- Motor vehicle sales
- Mortgage broking (yes we know what it’s like!)
- Real estate sales
- IT sales professionals
- Insurance industry