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Getting a mortgage with a complex income

Updated 19 April 2021

4min read

Nick Green
Financial Journalist

Not everyone has a predictable or reliable income. For those who are self-employed or who have a complex income for other reasons, it can be more difficult to get a mortgage. But it’s certainly not impossible. Here’s what you need to know about complex credit mortgages.

To secure a mortgage, you obviously need an income. If you’re an employee, this income typically takes the form of a salary that is paid monthly in identical instalments – nice and predictable. But not everyone has that kind of income. Self-employed people, freelancers, contractors, business owners, odd-jobbers, gig workers, workers in creative industries, itinerant workers and professional investors (to name just a few examples) may all have far less steady incomes – even if they earn the same overall amount or perhaps more.

The result is what is often called a ‘complex income’. Having a complex income can make mortgage providers more wary of lending to you. So here are some things to bear in mind if you’re in this position and want to buy a home.

What is a complex credit mortgage?

A mortgage is deemed complex if the potential borrower has a financial situation or needs that differ from those of the average person looking to use a loan to purchase a property. This is a broad definition that includes lots of potential types of borrowers. The most common forms of ‘complexity’ are:

Complex credit

The average borrower will have some debts, such as a credit card or student loan. If you have a lot of debt or some of your assets are tied up in debts, this is likely to be considered complex by most lenders. This doesn’t necessarily mean you have ‘bad’ credit, but it can still lower your score and make lenders more cautious.

Complex income

If you have multiple income streams coming from employment, commission, investments, rents or other sources, you could be classed as having a complex income. Note that this doesn’t necessarily mean you are self-employed. You might just have a job where your income fluctuates due to things like bonuses, overtime etc.

Variable income

Most employees earn a set wage that is paid in regular, predictable instalments. This makes it easy for lenders to see how much liability these borrowers can realistically take on. This becomes much harder if a person’s income varies over time.

Adverse credit

This means people who, in one way or another, either have credit ratings that fall below the standard acceptance rate due to defaults, arrears and missed payments or those that are subject to County Court Judgements, debt management plans or bankruptcy proceedings.

What counts as complex income?

Many people are breaking out of the defined employment patterns that have held sway for the last century. In the ‘gig economy,’ people may have multiple income streams or may make the majority of their annual income during one part of the year. These are examples of what would be considered complex income.

For those that are self-employed, freelance or a contractor, work might come in peaks and troughs. People with multiple part-time jobs may have differing levels of income throughout the year. Others may live mostly on investment income, dividends or government benefits. Equally, a person may be an employee but be on a commission-only contract or rely on a regular bonus. Landlords might rely largely on their rental income, which may fluctuate as tenants come and go.

One common scenario of complex income is where a person wants to buy a flat and rent out one or more room(s) to friends or co-tenants. The rent that these tenants pay certainly counts as income, but many lenders are less likely to consider it as ‘reliable’ income when deciding how much you can borrow or afford to repay.

Will my complex income affect a mortgage application?

While increasingly common for mortgage applications, having complex income can still pose a few questions. Lenders prefer applications that are simple, tick all the boxes and don’t need a lot of extra footwork or risk management. People with complex incomes may have gaps in their employment and earnings or have a relatively poor credit history. All of these factors will impact the affordability calculations that lenders use to determine loan-to-income ratios. While many lenders will still be willing to offer a mortgage, they may want a larger deposit or charge a higher interest rate.

How can I get a mortgage with complex income?

There are specialist lenders out there but being as prepared as possible is essential. Use our mortgage calculator, and make sure to work through our mortgage checklist to get a free estimate of how strong your mortgage application is.

Making use of a mortgage broker is also a good move, as they will have experience working with a wide range of personal and financial circumstances. They will be able to guide you through the mortgage application process and put you in contact with one of the many lenders that will be happy to try and agree a mortgage in principle with you.

Are there other types of complex mortgage?

The good news is that mortgages are not as black and white as they may first appear. As the numbers of self-employed people continue to grow, the mortgage market is adapting to accommodate a wider range of borrowers. In recent years there has been a growth in more complex mortgages such as self-build, retirement interest-only, listed building, unconventional property and guesthouse mortgages. This is a good thing for borrowers, who can now be more confident that they will be able to make their dreams a reality even if their financial circumstances deviate from the reliable, predictable income that the majority still have. For those with complex incomes, getting in touch with a mortgage broker should be the first step.

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About the author
Nick Green is a financial journalist writing for Unbiased.co.uk, the site that has helped over 10 million people find financial, business and legal advice. Nick has been writing professionally on money and business topics for over 15 years, and has previously written for leading accountancy firms PKF and BDO.