Mortgages for Bankers
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Mortgages for Bankers
Chirag Patel explains how the mortgage process works for bankers in the financial services industry.
What are the common misconceptions bankers have when applying for a mortgage?
A lot of bankers assume that because they work in finance, getting a mortgage will be straightforward. But the reality is lenders don’t automatically favour banking professionals.
A common misconception is that lenders will take 100% of their bonuses and commission into account, but many actually only count a proportion of this. Another would be assuming that share-based income will be fully considered – when in reality, lenders assess it very differently depending on how regularly it’s paid out.
Finally, because bankers have a strong earning potential, they might presume lenders will be more flexible. But the truth is that lenders focus on what you earn now, not where you might be in five years’ time.
What employment history does a banker need to apply for a mortgage?
Lenders generally like stability. If you’ve been in your role for at least six months to a year, you’re in a good position. If you’ve just started a new job, some lenders will wait until you’ve passed probation, whilst others may just be happy with a signed contract.
If you’ve recently moved to a different bank but have a strong track record in the industry, that can also work in your favour. It’s really about demonstrating consistency, whether you’ve been in the same job or you’re moving up the career ladder.
How is a banker’s income assessed when applying for a mortgage? Do mortgage lenders assess the long-term income potential of bankers?
Lenders break down bankers’ income into different parts. The base salary is straightforward and lenders will usually take 100% of that. But for bonuses, commission and share-based income, it gets a bit more complicated.
Typically, lenders look at your last two or three years and take an average. Some might use 50% of bonuses, others might take 100% if it’s been consistent.
If a big chunk of your income comes from shares or stock options, lenders will want to see a pattern. If you regularly cash them in, some lenders will consider them, but if they’re just sitting there they might not be included at all.
I’m a banker with an inconsistent income. How does that affect my ability to secure a mortgage?
Perhaps one year you get a big bonus, but the next year it drops. With fluctuating income lenders tend to play it safe. Many will take an average of the last few years, rather than relying on your highest earning year.
Others may focus on your base salary alone, and only consider bonuses at a reduced percentage. The key thing here is demonstrating a reliable pattern. If you’ve consistently earned well over time, even if it varies year by year, some lenders will take a more flexible approach.
In what ways can fluctuation in the value of shares affect a banker’s mortgage application?
This is quite common., but shares can be tricky because lenders want to see stable income, not potential future gains. If you receive shares as part of your compensation and regularly cash them in, some lenders will include that. But if they just sit there as long-term investments, they may not be counted at all.
Also, if the share price drops significantly, it could impact how much a lender is willing to rely on that income. Should a big part of your earnings come from shares, you may need to consider a lender that’s more open to including them in the affordability calculation.
Does being a self-employed banker change the application process?
Yes, it does. If you’re self-employed, lenders typically want to see at least one to three years’ trading history. Instead of pay slips, they’ll look at your tax return documents or company accounts.
The challenge for self-employed bankers is that lenders don’t just look at revenue, they look at net profit or declared income. If you’ve been writing off a lot of expenses it can reduce your borrowing power.
The good news is there are lenders who specialise in self-employed applicants and take a more flexible approach, but preparation is key.
Can I get a mortgage as a newly qualified banker?
Yes, but your options may depend on how long you’ve been in your role. If you’ve just started, some lenders might want to see a few months worth of pay slips before they approve you.
Others may be happy with a signed employment contract, especially if it includes a guaranteed salary. Being in a probation period can be a hurdle, but it’s not always a deal breaker. The main thing is showing that you’ve got stable ongoing income.
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How does the process differ for bankers applying for a larger mortgage compared to a more standard-sized loan?
When you’re applying for a higher value mortgage, lenders take a much closer look at your finances. You may need a larger deposit, sometimes 15% to 25% instead of the usual 5% to 10%.
Lenders might also stress test your affordability more rigorously, which means they’ll check if you can still afford the loan should interest rates rise. If a large part of your income comes from bonuses or investments, they may take a more conservative approach in assessing how much they’ll lend.
On the flip side, if you’re earning at a higher level, some lenders offer bespoke mortgage products tailored to high-income professionals, especially the private banks.
Is there any help for bankers buying a house? Are there any special mortgage schemes available for bankers?
There aren’t any schemes specifically for bankers, but there are general home buying schemes that could be useful – although earnings will be a key eligibility criterion on government funded schemes.
For example, if you’re a First Time Buyer, the First Home scheme offers discounts on new build properties. There’s also shared ownership, where you can buy a portion of the home and pay rent on the rest.
If you’re looking at a high value mortgage, private banks and lenders sometimes offer tailored mortgage products for professionals with complex income structures. It’s always worth checking the latest schemes on gov.uk or speaking to a mortgage broker to explore your options.
What if I’m a banker and have bad credit?
People don’t necessarily associate this with people in the banking profession, but it absolutely does happen.
Having bad credit won’t stop you getting a mortgage, but it does limit your options. Lenders will look at how recent and severe the issues are. A late payment from a few years ago would be less of a problem than a recent default.
Some lenders specialise in applicants with credit challenges, but they might require a larger deposit or charge higher interest rates. The key is getting your credit report in order and then speaking to a broker. We will go through that with you to help find the right lender for your situation.
Can I get a Buy to Let mortgage as a banker?
Yes, absolutely. Buy to Let mortgages are definitely an option for bankers, but they also come with different rules from residential mortgages.
Lenders usually want to see a minimum income, often £25,000 or more. They’ll assess the property’s rental income to make sure it covers the mortgage payments – both now and if rates rise in the future. If you rely on bonuses or commission, lenders may be stricter.
Most Buy to Let mortgages also require a larger deposit, typically 25% or more. If you’re buying as a long-term investment, it’s worth checking if your lender allows using share-based income or bonuses in the affordability assessment, as well.
What are some of the advantages of using a mortgage broker for securing a mortgage, particularly for bankers?
Bankers can have complex income structures and not all lenders assess income in the same way. A broker is really useful in identifying which lenders will consider bonuses, commissions or share-based earnings.
We also have access to private banks that you won’t typically find on the high street. That can help if you’re looking at high-value mortgages or using income through multiple sources – including family trusts.
Private banks are the main option if you’re buying a property with non-standard construction materials, or a part residential / part commercial mortgage, with farmland or with several titles on the land. This is very typical in this sector of the market. They can also help people with complex portfolio Buy to let investments.
Dealing with lenders directly can be time consuming and bankers are notorious for working long hours. Having a broker to handle the process for you can save a lot of hassle and potentially get you access to better terms.
Your home/property may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.
There may be a fee for mortgage advice. The precise amount will depend upon your circumstances, but we estimate it will be £499.
Chirag Patel trading as CKN Mortgages is an Appointed Representative of HL Partnership Limited which is authorised and regulated by the Financial Conduct Authority.
