We appreciate that sales, and any commission based role for that matter, can be a highly rewarding profession. While the sky is the limit for your earnings, you are essentially responsible for creating and converting your own opportunities. In this way, it can be a demanding role where your income can vary, and you need a strong financial partner to present you in the right way to the bank for securing your loan.
How is my income generally assessed as a sales professional?
Sales professionals are usually remunerated with a base income, plus commission and / or bonus. Like any other salaried employee, your base income is easy to understand and is readily accepted. However, for your commission and bonus income to be used by the banks to approve your loan, you will need to provide additional information – see below.
How are commissions assessed by different lenders?
Commissions are assessed as “non-base income”. Because they are variable and performance based in nature, each lender will have different requirements – some being more conservative than others based on the length of evidence required, and “shading” or “discounting” applied to the income.
For example:
- ANZ & Westpac – can annualise a minimum 3 months of commission income, as long as 3 months of Year-to-Date Income is showing in your pay slips
- NAB & Suncorp – require a minimum 6 months of commission income to be shown, and will take the average
- CBA & ING – are even more conservative, and require 12 months of commission income to be demonstrated
All lenders treat commission income similar to bonuses and will apply a 20% shading, meaning only 80% of your total commission income is considered for servicing purposes.
How are cash bonuses assessed by different lenders?
Typically, lenders will require you to have 2 years track record from the same employer of receiving a bonus. Usually 80% of the bonus is applied (i.e. a 20% shading) to deal with the variable nature of receiving a bonus. However, there are some lenders that only require you to show one year’s bonus, and others – typically non-bank lenders – can apply 100% of your bonus to loan servicing.
Examples from some lenders we have selected are set out below.
| Lenders | % Bonus income applied | Minimum time in job required | Calculation method |
|---|---|---|---|
| ANZ | 80% | 1 Yr | Lower of latest year or average of 2 yrs |
| Bankwest | 80% | 1 Yr | Most recent year |
| CBA | 80% | 2 Yrs | Average of 2 yrs |
| Macquarie | 80% | 6 Months | Most recent year |
| NAB | 80% | 2 Yrs | Lower of latest year or average of 2 yrs |
| St George /WBC | 80% | 2 Yrs | Bonus received in last 12 months |
| Bluestone | 100% | 1 Yr | Lower of latest year or average of 2 yrs |
| Firstmac | 100% | 1 Yr | Most recent year |
| Liberty | 100% | 2 Yrs | Lower of latest year or average of 2 yrs |
| MA Money | 100% | 6 months | Most recent year |
How are share bonuses assessed by different lenders?
Share based bonuses are an additional form of remuneration offered by large listed companies, especially if they are fast growing. They are common for mid-level to senior-level employees in Big Tech companies such as Amazon, Google, Meta, Microsoft, and Atlassian to name a few as a form of additional performance incentive but also to encourage retention.
Unfortunately, despite their popularity, few banks accept share based bonuses as part of your assessable income. For those that do, the treatment of share based income for loan servicing is typically as follows:
- Only vested shares can form part of your servicing income
- A 20% shading must be applied in line with standard bonus income treatment
- If the shares are denominated in a foreign currency, the value of the vested shares must be converted to AUD, and a further 20% shading applied
- Usually the current share price will be taken. However, if the share price has risen a lot in the past 12 months, the bank may adopt a more conservative stance
What can I do if I am having a bad sales year?
If your current sales performance is off, then it is likely to reduce the income you can show to the lender, and thus your borrowing capacity.
In this case, you will still likely have to get your commissions back in line with former earnings, but we can:
- Pick a bank with a more favourable treatment of assessing commissions
- Show evidence of your prior income, and explain why this current period might be off
- Consider non-bank or alternative lenders with more flexible requirements