NatWest taking 50% of bonus income for mortgage purposes

by Aaron Strutt

Jun 01 2024

NatWest for Intermediaries has a favourable lending policy regarding the acceptance of bonus income for mortgage affordability purposes. It is more generous than many of its competitors.

The bank consistently offers competitively priced two- and five-year fixes, along with generous income multiples, particularly for higher earners. NatWest’s mortgage lending policy treats bonus income differently depending on the applicant and how they are paid  — here’s a breakdown:

Regular Bonuses (Monthly or Quarterly)

• Monthly/quarterly guaranteed or discretionary bonuses: NatWest for Intermediaries allows 100% of this income to be included, provided it's evidenced via payslips and corresponds with year‑to‑date salary.

  • Monthly: shown via last 3 months’ consecutive payslips.

  • Quarterly: via the last 4 payslips.
    
    

NatWest's Annual/Bi‑annual Bonuses Policy

Divided into two categories:

1. Guaranteed bonuses (e.g., contractually promised):

   • For guaranteed bonuses NatWest will consider an average of the last 2 years' payments (cash element only) and use 100% of it in our affordability calculation. Please note that where the latest years' bonus was lower the underwriter will use 100% of the most recent year's bonus. NatWest will require your employment contract to confirm there are no stipulations on the bonus being paid.

2. Discretionary bonuses:

   • They average the cash amounts from the last two years and use 50% of that in affordability calculations.

   • If the latest year’s bonus dropped significantly, they’ll use 50% of the most recent year.

Aaron Strutt, product director at Trinity Financial, says: "Lots of our clients receive bonuses and they want to use them to secure a more generous mortgage. Most lenders accept bonus income, but the percentage used for affordability purposes varies.

"More banks and building societies have been easing their mortgage affordability rules, offering more generous loan sizes. This means many borrowers do not need to rely so heavily on their bonus income."

Other Variable Income

• Commission: Up to 100%, if evidenced by last 3 months’ payslips or YTD income.

• Overtime: Regular overtime counted at 100%, with clear documentation over a 3-month period.
  Other income like employment allowances and shift allowances: Generally 100% accepted.
  
  

How Much Will NatWest Lend? What Is The Lending Policy?

• Loan-to-Income (LTI): Typically up to 5–5.5× income, depending on loan size and credit score and salary.

• Loan-to-Value (LTV): Usually up to 85% for large loans, lower for standard applications. 10% deposit mortgages are available. 

• Maximum term/age caps: Up to 40 years or up to age 75.

• Minimum income & product-specific rules:

  • For Premier mortgage interest-only: Minimum sole income £75k, joint income £100k combined.

  • For standard “Buy-to-Live”: minimum gross income £50k combined, LTI up to 5×.
    
    

In Practical Terms

What NatWest will use from your bonus:

• Monthly/quarterly bonus: 100% (if consistent and evidenced).

• Annual guaranteed bonus: 100% of average (or latest if lower).

• Annual discretionary bonus: 50% of the average of the past two years (or most recent year).

They will require payslips (3–4 months or 2 years for contracts), P60s, and employment terms for guarantee evidence.

Key Takeaways

Call Trinity Financial on 020 7016 0790 to secure a bonus income mortgage, book a consultation, or complete our mortgage questionnaire. 

The information contained within was correct at the time of publication but is subject to change.

Your mortgage is secured on your property. Your property may be repossessed if you do not keep up repayments on your mortgage