Which Banks Treat "Bonus Income" Most Favourably When Calculating Borrowing Power?

LemonShapedRock on 27/12/2023 - 22:17

Hey everyone,

I'm going to kick of some calls in the new year to shop around for the best lender for me. Wanted to get some ideas from here first.

One factor is around how the banks will factor in bonuses into the borrowing power calculations.

I have 2 years of bonus history (which is what I remember being told was the standard for most banks)

Any recommendations on which bank consider bonus payments most favourably?

Thanks!

Financial Home Loan

Comments

  • srsparky on 27/12/2023 - 22:30
    +1

    Suncorp was the most favourable when we were going through refinancing about 2 years ago.

  • Gunnar on 27/12/2023 - 23:17
    +3

    Are you going through a broker? They (or at least a good one) will be able to tell you which banks are more lenient on this when assessing applications

    • freefall101 on 28/12/2023 - 00:05

      Even if not going through a broker, it's handy to talk to them so they can use the calculator and let you know.

      Personally I tried one and I found a better rate myself, but they did at least help to let me know lending capacity.

  • geekcohen on 28/12/2023 - 07:05

    Isn't your bonus technically part of your general income rather than shown as separate? Could you not provide your payslips and ATO Tax Summaries showing your overall income for a few years?

    The only "bonus" income I think some would consider is side hustles and/or small sole trader businesses on top of your full time income.

    • tajid on 28/12/2023 - 10:00
      +1

      No, most lenders apply haircut to bonus income as they are more fluctuative, some may just do average of the last 2-3 years.

      Bonus in this case would be performance/year end/commission, so no, they will not generally be considered 'general' income when lenders assessing a loan.

  • Drakesy on 28/12/2023 - 09:47
    +3

    If you're relying on bonuses on getting you over the line you most likely are borrowing too much.
    Have a chat to a mortgage broker, they're free.

    Just my two cents.

    • onceupon8 on 28/12/2023 - 10:07

      I think that's a real generalisation - some people have more than 50% of their salary from end of year bonuses.

      • elgrande on 28/12/2023 - 10:15

        Examples pls.

        • mskeggs on 28/12/2023 - 10:35
          +1

          Wall Street finance types. Some years Macquarie bank traders have taken home 100% bonuses, though I don’t know if that still happens.

      • Drakesy on 28/12/2023 - 10:45
        +5

        In which case if its a bonus and not a guaranteed form of income what happens when you dont receive it and can't pay the mortgage?

        Hence the bonus terminology

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