03-01-2023
Introduction
Are you a tech or finance professional with equity compensation such as Restricted Stock Units (RSUs) or vested stock? This page is designed for individuals like you who receive a significant portion of their income through stock-based compensation.
In this article you’ll discover how using RSU and restricted stock income can enhance your mortgage affordability, increase your borrowing power, and open up a wider range of mortgage options. Understanding how lenders assess RSU income is crucial for maximising your property purchasing potential and securing the best possible mortgage terms.
Using Restricted Stock Income & RSU for Mortgage Affordability Purposes
Using vested stock and Restricted Stock Units (RSUs) as part of your mortgage affordability calculations can significantly enhance your borrowing power. When properly documented and assessed, these income streams can be included by mortgage lenders to increase the total qualifying income.
However, only a few lenders assess RSU income for a mortgage, and the treatment of RSU income varies significantly between lenders, which can affect how much you are able to borrow.
When using vested stock or RSU income for mortgage affordability purposes, lenders will carefully review your vesting schedule, compensation statements, and bank statements showing the liquidation of stock units. Lenders assess RSU income alongside your basic salary and any cash bonuses, rather than on a standalone basis.
They will require documentation such as RSU grant and vesting schedules, payslips, tax forms (P60), and verification of employment. Lenders will typically ask for a copy of your vesting schedule and may use the current or average share price over a period to assess your RSU income.
Typically, lenders use between 50% and 100% of your RSU income, depending on factors such as the financial health of your employer, the length of your employment, and the consistency of your vesting schedule. Lenders typically require a history of consistent RSU income for at least two to three years before considering it for mortgage applications, and may apply a ‘haircut’ to account for potential stock price volatility.
Specialist lenders often have more flexible criteria for assessing RSU income compared to mainstream or high street lenders, and most high-street banks do not have clear policies for RSU income. The overall income profile, including the percentage of total income from stock unit income, also influences lender assessments. Some lenders may even allow RSUs to be used as part of the deposit, depending on their policies.
Working with a specialist mortgage broker experienced in equity compensation can help you navigate these complexities and identify lenders who are willing to consider your vested stock and RSU income favourably.
To discuss your funding requirements call 03300 100313 or email enquiry@foxdavidson.co.uk
Why Use Vested Stock & RSU Income for Your Mortgage?
Maximise your mortgage eligibility by leveraging your total compensation package, not just your base pay. Here’s how RSU income transforms your mortgage affordability calculations:
- Boost Your Borrowing Power – Include up to 100% of your RSU income to qualify for larger mortgage amounts, often increasing affordability by 30-50%.
- Leverage Your Total Compensation – Don’t limit yourself to basic salary when investment banks and global firms offer substantial equity compensation packages including restricted stock units (RSUs) and stock options. Lenders assess RSU income as part of your overall income stream, alongside basic salary and cash bonuses.
- Access Premium Properties – Higher mortgage affordability calculations open doors to better locations and larger homes previously out of reach.
- Faster Mortgage Approval – Specialist lenders and boutique lenders understand vesting schedules and streamline the mortgage process for equity compensation.
- Most Competitive Interest Rates – Strong total income profiles often qualify for better mortgage rates and terms from private banks and lending institutions.
Bonus income and cash bonuses are also considered by lenders, provided there is a consistent history. RSU income is evaluated similarly as a predictable income stream when properly documented.
Unlike stock options, restricted stock units (RSUs) provide predictable income streams that mortgage lenders can assess for qualifying income once properly documented.
What Makes RSU Mortgages Different?
Our specialist approach to stock-based compensation sets us apart from conventional mortgage applications:
- Specialist Lender Network – Access to private banks, boutique lenders, and lending institutions who actively accept RSU income and understand vesting schedules. Specialist lenders often have more flexible criteria for assessing RSU income compared to mainstream lenders.
- Complex Income Assessment – Professional evaluation of stock unit compensation, vesting patterns, and foreign currency conversions for accurate mortgage affordability calculations.
- Higher Net Worth Treatment – Recognition of your total compensation package including unvested stock holdings and performance milestone achievements such as meeting a certain sales target.
- Tech & Finance Industry Expertise – Deep understanding of equity compensation issued by major employers and how each company’s stock compensation structure affects mortgage eligibility.
Flexible lenders and other lenders may have different criteria for accepting company stock and RSU income. The treatment of RSU income varies significantly between lenders, impacting the amount you can borrow.
What Our Clients Are Saying
Real success stories from professionals who maximised their mortgage potential using restricted stock units (RSUs):
“I thought I could only borrow based on my basic salary, but including my vested stock income increased my mortgage by £200,000. The specialist mortgage broker understood my vesting schedule perfectly.”
“Unlike other mortgage advisers, they knew exactly how to present my RSU income to lenders. Got approved for a larger mortgage with competitive interest rates in just 3 weeks.”
“My compensation package includes a significant portion of stock units, and not all lenders would consider them. This team found lenders who accept bonuses and RSUs income at full value.”
“The mortgage process was seamless. They handled all the complex documentation around my vesting schedules and foreign currency compensation.”
Mortgage Options for RSU Income
Access the full spectrum of lending options that accept RSU income and understand equity compensation structures:
- High Street Banks
- Major lenders including Santander and Barclays may accept RSU income with 2+ year vesting history for competitive rates. However, most high street banks do not have clear policies for RSU income and often consider it non-standard.
- UK Mortgage Lenders
- Only a few UK mortgage lenders will consider RSU income for a mortgage, which is especially relevant for first time buyers seeking to use RSU income for their mortgage application. Eligibility often depends on a history of vesting and employment stability.
- Private Banks
- Premium service for high net worth individuals with complex non-cash compensation structures and international equity awards. Vested RSUs can be used for mortgage qualification, provided you can demonstrate the vesting schedule and fair market value.
- Building Societies
- Holistic affordability approach considering your overall income including bonus paid income and vested shares for generous mortgages.
- Specialist Lenders
- Boutique lenders focusing exclusively on equity compensation mortgages with flexible criteria for various vesting schedules, including those on a fixed term contract. These lenders may be more willing to accept RSU income than most high-street banks.
- Interest Only Mortgages
- Some lenders offer interest only mortgage options, where eligibility criteria include a credible repayment plan. RSU income may be considered for these products, especially if the RSUs are from well-established companies.
- Foreign Currency Considerations
- If your RSU compensation is paid in US dollars or other foreign currencies, lenders will assess currency stability and may have specific requirements for loan qualification.
- Monthly Payments
- The difference in monthly payments between interest-only and repayment mortgages can be smaller than expected. RSU income can impact your payment structure and overall affordability.
Most popular choice: Specialist lenders who understand that vesting typically occurs quarterly or annually and can assess future income streams.
Frequently Asked Questions
- Can I use unvested RSUs for mortgage calculations?Some specialist lenders consider future vesting schedules in affordability calculations, especially for employees with established vesting patterns at publicly traded companies. Some lenders may apply a ‘haircut’ on foreign-currency RSUs to account for exchange-rate fluctuations.
- Do I need to sell my RSUs before applying?Not necessarily. While bank statements showing liquidation history strengthen applications, many lenders accept bonuses and stock compensation based on vesting schedules alone. Lenders will require documentation such as RSU grant and vesting schedules, payslips, tax forms (P60), and verification of employment.
- How do lenders handle stock price volatility?Most lenders use average values over 12-24 months to smooth fluctuations, assessing affordability based on historical rather than current stock prices. Lenders assess RSU income based on the vesting schedule and the current share price or the average share price over a certain period, and may apply a ‘haircut’ to account for volatility. Lenders will evaluate the financial health and stability of the company that issued the RSUs.
- Can foreign currency RSUs be used for UK mortgages?Yes, with proper currency conversion documentation. Many global firms issue equity compensation in USD or EUR, which specialist mortgage brokers routinely handle for UK mortgage purposes.
- What if I’m between vesting periods?Lenders review your complete compensation history, including how much bonus paid and equity compensation awarded historically, plus future vesting schedules to assess ongoing income streams.
- How does RSU income affect my debt to income ratio?Including vested stock income typically improves your debt to income ratio significantly, as it adds substantial qualifying income without additional debt obligations. Lenders often assess the financial health of the employer when considering RSU income for mortgage applications.
Maximise Your Mortgage Potential Today
Don’t let traditional lenders limit your home buying power to just your basic salary. Unlock the hidden value in your total compensation package with specialist mortgage advice that understands restricted stock units (RSUs) and equity compensation.
Get Your Free RSU Mortgage Assessment
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Transform your equity compensation into property ownership power. Book your consultation today and discover how much more you could borrow using your complete compensation package.
