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I am employed as a software engineer in a company that grants shares and a sign on bonus. Do mortgage lenders in the UK take into consideration stock grants and annual sign on bonus (sign on bonus but given over 2 years for example) when lending? If yes, are they high street lenders or private brokers?

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    If you're relying on a sign-on bonus that lasts 2 years to gain finance a mortgage that lasts 20 to 30 years, then you may be over-stretching your finances.
    – Simon B
    Feb 11, 2020 at 0:09
  • Simon B, how so? , so if your sign on bonus + base allows you to afford a house worth £500k on which you pay say £1300 pm mortgage how is that different from renting in London which costs the same? The only difference being, if you don't count the bonus, you can borrow less. Feb 11, 2020 at 7:32
  • @SamerTufail because interests might swing +/- 5%. If you had to rely on a sign on bonus to get the mortgage, you are likely pushing the limit of what you can handle IF interests should climb.(and the banks know it, which is why they seldom calculate with windfall money)
    – Stian
    Feb 11, 2020 at 7:37
  • @Stian Yttervik, at that point you probably sell. I did check with 1 mainstream lender and they said they need last 3 month payslips and whatever is on it, forms part of how much they would lend. For stocks I did not get a good answer. Feb 11, 2020 at 7:45
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    Ultimately, this is a question you need to ask your lender. Anecdotally, I've found that lenders tend to be very conservative and risk-averse, so may take nothing more than your salary as evidence of income. They're interested in your regular, contractual, monthly income. Annual or one-off discretionary awards tend not to count. Feb 11, 2020 at 9:05

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In short, no.

Anything that sits within volatile income (of which sign on bonuses, golden parachutes, stock grants, annual bonuses etc etc all most definitely are), lenders tend to discount because what they care about is your ability to make stable payments for long periods - none of which is impacted much by methods of bonus like this (if anything - it can often be a sign of instability, showing people jumping jobs often, working for risky, start up style companies with a high risk of failure or other higher risk employment actions etc).

If you get a large number of these types of payments you're generally better off aggressively saving the ones you get now and add to the initial deposit (to reduce your interest and payments later), and to be mindful of mortgage products that allow early payments so when you get them later you can aggressively pay down your mortgage.

If you want to have your cake and eat it and factor in all these volatile payments as the same as income, then sadly lenders have far too long a track record of these types of people blowing up and typically won't go near it.

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