Complex Income - How to Secure a Mortgage

05-January-2022
05-January-2022 17:18
in Private clients
by Sam Hodgson
How to Get a Self Employed Mortgage - Everything You Need to Know

If you're earning a mixture of salary, dividends, bonus, rental, or other forms of income, you could struggle to reach your full borrowing potential when it comes to getting a complex income mortgage.

Many high street lenders will just take your largest source of income and exclusively use that figure for their income multiplier calculations.

Even if you supplement your income from self employed work, earn rental income, or can easily liquidate some capital, some banks won’t put in the extra effort to factor this into their mortgage calculators.

The solution?

There are specialist lenders out there equipped to deal with complex mortgage cases, but you probably need to speak to a specialist mortgage broker to consolidate your application and connect you with the right ones.

In this guide, we look at what lenders classify as complex income, why it's difficult to get a mortgage with it, and how you can get around the hurdles.

In This Guide:

What is a complex income mortgage?
What is classed as complex income?
Why is it difficult to get complex income mortgages?
How can you get a mortgage with complex income?
Should I use a mortgage broker for a complex income mortgage?

Complex Income Mortgage Property

What is a complex income mortgage?

A complex income mortgage is a mortgage for anyone earning money through multiple sources or via unorthodox income streams.

It could be foreign currency income, a mixture of different types of earnings, or just an irregular and varying income pattern that separates your income from the norm.

And because some banks and mortgage lenders don’t deal with these complex income cases very often, they’re not always equipped to deal with your application in the appropriate way.

If this is the case, you might not be able to get the full loan size you want, despite legitimately earning enough to qualify for it.

What is classed as complex income?

Here’s a list of complex income examples for mortgage applications and the types of income that we see most people struggle with:

  • Company directors

If you’re the director of a company then you probably earn a combination of salary, dividends, directors' loans and other income streams which can be too complicated for some lenders.

  • Professionals with multiple income sources

For example, doctors and medical professionals, solicitors, barristers and accountants - including those who do ad hoc freelance work full time or on the side.

Or, if you work overtime during certain periods of the year - your actual annual income figures may not be written into your contract and you could struggle to get your overtime factored in.

  • Contractors

Particularly if your earnings are irregular and fluctuate based on big projects or contracts throughout the year, you could struggle to get the full value out of your income.

Mortgage With Foreign Income

  • Entrepreneurs

You could have issues reaching your mortgage potential if you have income streams from multiple businesses, rental income from a property portfolio, or perhaps a stock portfolio producing investment income and providing capital to sell down.

  • Expats and earners in a foreign currency

If you’re living and working abroad and looking to buy property in the UK then you could struggle to verify your income, particularly if you’re earning in an overseas currency.

  • Working in the gig economy

If your earnings swing during certain months of the year and come through irregular channels at varying income amounts, you could be seen as higher risk by lenders and struggle to get accepted.

mortgages for complex income portfolios

Why is it difficult to get a complex income mortgage product?

There are three main reasons our clients struggle with when getting mortgages with a complex income.

Knowing the issues you could face will help you understand how you can make your income more attractive to lenders before you even apply.

1. Complex income is higher risk for lenders

Particularly if your earnings are irregular, from multiple sources or in varying amounts, lenders will naturally worry about your ability to make mortgage repayments if your income falls through or pauses for an extended period.

If you can prove the consistency of your income through previous years of tax returns and SA302 forms then you can make your income more robust for your mortgage application.

But also, speaking to a specialist mortgage broker who can connect you to the right lenders with knowledge of specific industries will give you a greater chance of securing the levels of finance you need.

Foreign Currency Income Mortgage

2. Complex income is a greater administrative burden for mortgage lenders

A lot of big lenders and high street banks are geared up for the general public and your typical sources of employed, regular income – but not for complex income portfolios containing multiple sources and currencies.

But that’s where a specialist lender comes in.

Some lenders do have the procedures and people in place to get a comprehensive and realistic interpretation of your income and offer you a better mortgage at competitive rates.

And a specialist mortgage broker like Clifton Private Finance can connect you with the best lenders for your unique situation.

3. Higher risk of fraud

In the same way that it requires more administration work to verify an overseas employer for your income compared to a UK company, it also presents a higher risk of fraud to mortgage lenders.

With language barriers and cultural and legal differences between jurisdictions, it muddies the water and puts lenders at a higher risk of being exposed to financial crime – unless they have the right specialists in place to confidently assess your case.

High Income Mortgages

How can you get a complex income mortgage?

Here are our top tips on how you can make your complex income more appealing to lenders and more robust for your application:

1. Get your tax documents and proof of income together

Consolidate your tax returns, SA302 and Tax Year Overview documents in advance of your mortgage application to bolster your proof of income when requested. Related blog post: tax documents blog.

However, even if you don’t have a recent tax return or proof of your other wealth sources – don't panic, as there may still be ways you can leverage this income.

If you’re earning self employed income overseas it can get more complicated as you’ll need different documents – speaking to an accountant who can consolidate your tax information is recommended.

Book Consultation

Read our case study below dealing how we secured our client a new mortgage without a recent tax return - and how we saved him thousands on his interest rates in the process.

No Tax Return Case Study

2. Check your UK credit score and iron out any issues before applying for your mortgage

You can check your score for free, here:

  • Experian
  • Equifax
  • TransUnion

For tips on how to improve your credit score, read this: How To Get a Mortgage - 19 Top Tips for Borrowers

Again, don’t panic if you have a patchy credit rating or poor score – there are still lenders that will offer you a mortgage.

We see a lot of UK expats looking to return to the UK who don’t have a tracible UK credit history, and many UK mortgage lenders end up rejecting them at face value.

But a specialist mortgage adviser can help you get around these hurdles and secure a mortgage.

Read our case study below for a UK expat High Court Judge earning in a foreign income looking to buy property in England. 

Expat Solicitor Mortgage Case Study

3. Get the right loan to value, deposit band and income multiplier rate

If you are trying to stretch to a mortgage for 5 or 5.5 times your income, then you have to be realistic with what you’ll be able to get and how much of a deposit you can put down.

While there are lenders and private banks out there who can lend against higher income multipliers, it won’t always be the case and you could need to put down a higher deposit to help your application.

If you’re unsure how far your income or deposit will get you, speaking to a mortgage adviser can help clarify exactly what income and deposit you’ll need for your ideal property purchase.

We can also advise on whether an interest only mortgage, fixed rate or tracker mortgage may be right for you depending on your current situation, whether you're a mortgage expert and portfolio landlord, or a first time buyer. 

4. Speak to a specialist mortgage broker

Should I use a mortgage broker for a complex income mortgage?

As we’ve seen, many mainstream lenders struggle to provide competitive mortgages to individuals with a complex income structure:

  • It costs more to invest the recourses into approving your application (verifying your income, factoring in risk etc.)
  • Lenders can assume a higher risk that you default on your mortgage payments if they don’t understand your income
  • There’s a higher risk of fraud with unfamiliar and foreign income streams, which puts lenders on edge

This means you have a significantly smaller lending pool to choose from.

But, there are lenders with the resources in place to provide property finance against unusual income streams – you just need to find them.

The problem is that a Google search won’t get you very far – specialist lenders and private banks don’t always make it clear what types of applicants they accept and what specialists they have.

They often rely on mortgage brokers who understand their bespoke services to connect them with the right borrowers, without having to sift through applications that aren’t right for them.

And as a borrower, it works in the same way.

It’s very difficult to compare mortgage rates if you have complex sources of wealth - every lender you speak to needs to know the full details about your case, and it's time-consuming to say the least.

Instead, a specialist mortgage broker can identify the best lenders for your requirements and streamline the application process through to completion, providing you with a wide range of the best finance options to suit your requirements.

Give us a call

Contact us to arrange a convenient time for an in-depth first discussion with one of our trusted finance brokers and see how we can help:

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0117 959 5094

Or click here to make an online enquiry with us.