Secured Loans for Commission-Based Earners

How Lenders Calculate Commission Income

The approach to commission income varies between lenders. The most common method is to take a twelve or twenty-four month average of actual commission received and use that average as an ongoing income figure. Using a longer period of twenty-four months is more conservative but also more stable, as it smooths out a single exceptionally good or exceptionally poor year.

Some lenders will use 100 per cent of your average commission, while others apply a haircut — perhaps taking only 50 to 75 per cent of the average figure — to reflect the variability inherent in commission earnings. The proportion used depends on the lender’s risk appetite and the sector you work in. Roles where commission is highly predictable and tied to recurring or renewal income may attract a more favourable treatment than those involving more speculative sales activity.

Your base salary is typically assessed in full, with the commission element added at whatever percentage the lender’s criteria allows. The combined figure is then used in standard affordability calculations alongside your existing commitments to determine how much you can borrow.

Income Evidence for Commission-Based Applications

To support a commission-based secured loan application, you will typically need to provide twelve to twenty-four months of payslips showing both your base salary and commission payments. Where commission is paid monthly, this is straightforward. Where it is paid quarterly or annually, providing an explanation of the payment structure alongside the payslips is helpful.

Your most recent P60 tax summary is also a valuable document as it shows your total gross earnings for the tax year, including commission, verified by HMRC. P60s for two years provide the twenty-four month income history that many lenders prefer. Bank statements covering the same period as your payslips will corroborate the income receipt and show how your earnings fluctuate throughout the year.

If your commission income has varied significantly between years — for example, due to a change in role, a difficult trading period or a bumper year — providing an explanation helps the underwriter contextualise the data. A lender who understands why income varied can make a more informed decision than one working from raw numbers alone.

Commission Income in Different Sectors

The sector you work in influences how lenders view your commission income. Estate agents and letting agents typically earn commission on property transactions, which can be highly seasonal and cyclical. Lenders lending to estate agents will often want two years of commission history to understand the income pattern across market cycles.

Financial services professionals — including mortgage advisers, insurance brokers and wealth managers — often earn a combination of initial commissions and ongoing renewal income. Renewal income can be particularly valued by lenders as it is more predictable than one-off transactional commissions. Providing a breakdown of initial versus renewal commission can help lenders assess the sustainability of your earnings.

Sales professionals in sectors such as telecoms, software, manufacturing or business services typically earn commissions linked to target achievement. Monthly or quarterly commission statements from your employer, alongside payslips, can help demonstrate the basis on which commission is calculated and provide context for any significant variations.

In all cases, working with a broker who understands your sector and knows which lenders have the most favourable policies for your type of commission income will help you maximise your assessed income and access the best possible borrowing terms.

Commission Haircut Comparison Across Lender Types

Different lenders apply different ’haircuts’ to commission income — the percentage of your average commission they will include in the affordability calculation. This table gives an indicative view of typical treatment by lender type, though individual policies vary.

Lender Type	Base Salary	Commission Treatment	History Required
High-street bank	100%	50-60% of avg	12-24 months
Prime specialist (e.g. Shawbrook)	100%	75-100% of avg	12-24 months
Specialist (e.g. Pepper, UTB)	100%	100% of avg	12 months
Near-prime (e.g. Together)	100%	75-100% of avg	12 months
Renewal/trail income specialists	100%	90-100% recurring	12-24 months

Identifying the lender whose commission treatment best fits your earning profile is one of the most important ways a broker adds value for commission-based borrowers. A borrower with a £28,000 base and £22,000 annual commission, for example, can see maximum loan offers vary by £40,000 or more between a high-street bank (which might count only £11,000 of that commission) and a specialist lender such as Pepper Money or United Trust Bank (which may count the full £22,000 if two years of consistent history exists). Always ask the broker to model both the highest and lowest haircut treatments so you understand the full spread before narrowing to a preferred lender, and confirm on the ESIS which figure has actually been used in the affordability model that underpins your offer.

Maximising Your Borrowing with Commission Income

The single most effective way to maximise borrowing based on commission income is to apply during a period of strong, consistent commission history. If your last twelve months have included some months of very low or no commission, waiting until these months roll out of the assessment window — or providing a twenty-four month average where the overall picture is stronger — may improve your assessed income.

Ensuring that your commission payments are clearly visible on your payslips and bank statements is also important. Where commission is paid separately from base salary, or through a separate payment channel, it should be clearly identifiable and traceable. Lenders cannot assess income they cannot see, so making the income trail as clear as possible is in your interest.

The equity in your property also plays a role in maximising what you can borrow. A high equity position and low loan-to-value ratio allows lenders to be more generous with their income assessment, particularly for variable income types. If you have significant equity, a specialist broker can help you access lenders who will take the most complete view of your commission earnings.

Worked Example: Sales Professional at 60/40 Base/Commission Split

Consider a software sales executive with a £45,000 base salary and average commission of £32,000 per year over the last two years (OTE roughly £77,000). Their home is worth £420,000 with a £175,000 first-charge mortgage on a two-year fix at 4.49% with 18 months remaining. They want to raise £60,000 for a loft conversion and kitchen refit.

At a high-street bank using a 50% commission haircut, their assessed income would be £45,000 + (0.5 x £32,000) = £61,000. At a specialist lender such as Pepper Money or UTB using 100% of commission, assessed income becomes £77,000. The higher assessed income supports a larger loan at a more competitive APRC.

A 15-year secured loan of £60,000 at an APRC of 8.9% produces a monthly payment of approximately £603. The ESIS shows total amount payable of roughly £108,500. The borrower uses the seven-day reflection period to confirm the loft conversion quotes and verify that the new payment is comfortable through commission-lean months.

Consumer Duty, MCOB and Practical Protections

The FCA Consumer Duty has particular relevance for commission-based borrowers because assessment methodologies vary so widely. Under the Duty, firms must deliver fair value and good outcomes, which means brokers should help identify the lender with the most appropriate commission treatment for your circumstances, not simply the lender offering the easiest approval or highest commission.

The Mortgage Conduct of Business (MCOB) rulebook requires lenders to assess affordability on a sustainable basis, stress-testing payments at higher interest rates and adjusting for income variability where appropriate. The resulting ESIS must show the APRC, total amount payable and early repayment charges in a standardised format.

If you later believe the loan was mis-sold or the broker failed to identify a more suitable lender, you can complain to the firm and escalate to the Financial Ombudsman Service, which can award up to £430,000 per complaint for acts or omissions from 1 April 2025. Always verify authorisation via the FCA Financial Services Register before engaging with any broker or lender.