Table of Content
Introduction
Stock options and Restricted Stock Units (RSUs) can play a significant role in boosting your mortgage affordability. If you’re a professional receiving a substantial portion of your income in the form of stock-based compensation, you may be able to use it to secure a larger mortgage. However, not all lenders treat this income the same way, so it’s essential to work with an experienced mortgage broker like Strive Mortgages to navigate the process.
What Are Stock Options?
Stock options are a form of employee compensation that gives the holder the right to buy company shares at a predetermined price, often as an incentive for performance and tenure. Employees can purchase the stock at this fixed price, potentially benefiting from market price appreciation.
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What Are RSUs?
Restricted Stock Units (RSUs) are company shares granted to employees as part of their compensation. Unlike stock options, RSUs do not require the employee to purchase shares—they are awarded based on tenure or performance and typically vest over a set period. Once vested, RSUs can be sold or retained as an asset, making them a viable source of income for mortgage affordability assessments.
Can Bonuses Be Used for Mortgage Income?
Yes, many lenders allow bonuses to be included as part of your mortgage affordability assessment. However, how bonuses are treated varies:
- Some lenders will use 100% of the bonus income.
- Others may only accept 50%.
- Most lenders take a two-year average of bonuses.
- If the bonus is on a declining trend, lenders may only consider the latest year’s earnings.
Can I Use Vested Stock for Mortgage Affordability?
Yes, some lenders allow vested stock to be considered as part of your mortgage application, provided you have a track record of receiving and liquidating it. Factors lenders may assess include:
- Consistency of stock-based income over the last 2-3 years.
- The company’s financial stability.
- The proportion of income derived from stock versus salary.
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Can Income Paid in Foreign Currency Be Used?
Yes, some lenders accept foreign currency income, but specific conditions apply:
- It helps if the income is paid into a UK bank account.
- If you work in the UK but receive income from a remote employer, some lenders may still consider it.
- The income will typically be converted to GBP, and in some cases, a haircut (reduction) may be applied to account for currency fluctuations.
What Mortgage Rates Are Available?
Mortgage rates for individuals using stock options or RSUs are generally in line with standard income-based mortgages. The challenge is finding lenders willing to accept stock-based income rather than accessing specific interest rates. If a specialist lender is required, rates may be slightly higher due to the perceived complexity of this income type.
Which Lenders Are Best for This Type of Income?
Lenders that cater to RSU and stock-based income include both mainstream banks and specialist lenders. Some of the smaller building societies take a more holistic approach to assessing affordability, while private banks can be a viable option for high-net-worth individuals.
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How Strive Mortgages Can Help
Not all lenders understand or accept stock-based compensation as qualifying income, and those that do have varied criteria. At Strive Mortgages, we specialize in securing mortgage solutions for professionals with RSU and stock option income. We provide:
- Expert knowledge of lenders who accept RSU and vested stock income.
- Tailored mortgage solutions for high-net-worth and equity-compensated professionals.
- A seamless application process, ensuring all necessary documentation is in place.
- Access to exclusive mortgage deals through our strong lender relationships.
Get Expert Mortgage Advice Today
If you’re looking to use vested stock or RSU income to secure a mortgage, Strive Mortgages can help you find the right lender and deal. Contact us today to discuss your options and start the mortgage process with confidence.
FAQs
Yes, some lenders accept RSU income, but they typically require a history of vesting and liquidation.
No, only select lenders consider stock-based compensation as part of affordability assessments.
Yes, some lenders accept foreign currency income, but it may be subject to conversion rates and possible reductions.
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