Can I Get a Home Loan with Bonus Income in Australia?

Understanding Bonus Income in Home Loan Applications

Bonus income, often seen as an attractive addition to one's salary, is generally considered by lenders when assessing your home loan application. However, its acceptance largely depends on the consistency and reliability of these bonuses. Lenders prefer stable income streams, and while bonuses can enhance your borrowing power, they come with their own set of considerations.

How Lenders View Bonus Income

Australian lenders typically assess bonus income differently compared to your regular salary. The key factors they consider include:

• Consistency: Lenders look for regularity in bonus payments. If you have received a bonus consistently over several years, it may be considered more reliable.
• Documentation: Providing documented proof of past bonus payments, such as payslips or tax returns, is crucial. Generally, lenders look for at least two years of consistent bonus income.
• Percentage of Overall Income: Lenders may cap the percentage of your overall income that can come from bonuses. Typically, they might accept 50-80% of your bonus income, depending on its regularity and your industry.

Practical Tips for Including Bonus Income

To maximise the potential of your bonus income in your home loan application, consider the following strategies:

1. Keep Thorough Records: Maintain detailed records of your bonus payments. Lenders appreciate transparency and clear documentation, which can include payslips, employment contracts, and tax returns.

2. Professional Advice: Engage with a mortgage broker who understands the nuances of bonus income. A broker can guide you through different lenders' policies and help you choose one that best recognises your income.

3. Strengthen Other Financial Aspects: Improve your overall financial profile by reducing debt, maintaining a strong credit score, and increasing savings. This can offset any perceived risks associated with relying on bonus income.

Common Mistakes to Avoid

When relying on bonus income, avoid these pitfalls:

• Overestimating Income: Do not assume your entire bonus will be considered. Lenders often apply a discount to bonus income, so base your calculations on the lower end to avoid disappointment.

• Inconsistent Bonuses: If your bonuses are irregular, it might be better to exclude them from your primary income assessment initially.

• Neglecting Other Criteria: Remember that lenders consider a holistic view of your financial situation, including credit history and existing debts.

How Esteb and Co Can Help

At Esteb and Co, we specialise in understanding the diverse income streams of our clients and how they can be optimised in securing a home loan. Our team is skilled in navigating the complexities of bonus income and can help tailor a borrowing strategy that aligns with your financial goals. We work closely with multiple lenders to find options that best recognise your income profile, ensuring you are well-positioned to achieve your homeownership aspirations.