A young professional who works in private equity came to me who was seeking an interest only mortgage using bonus income. He was 28 and was looking to purchase a property for £1.5 million in South West London – £975,000 of which he wanted to borrow.
His base salary was £100,000, however, the majority of his income came in the form of bonuses. For example, in 2014, he received an additional £125,000. Usually when a client generates a lot of income from bonuses which are not guaranteed we are able to persuade banks to consider them if there is a continuous history of receiving those bonuses.
However, my client’s circumstances were more complex as he moved job the year before, albeit within the same industry. In order to secure an interest only mortgage using bonus income it was essential that the bank would consider the bonuses my client had previously been awarded by other employers. The problem was that most banks will not do this if you have moved company…
Aside from an interest only mortgage using bonus income my client’s other preference was for low regular payments but with the flexibility to then use his bonuses to make large lump sum overpayments. This would ideally be an interest only mortgage which didn’t carry penalties for making the large overpayments he wanted.