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19 / 09 / 2023

Can I Get A Mortgage Using Vested Stock Bonuses?

There are various employee incentives across the UK aimed to attract and retain talented individuals to companies. One such incentive that has gained popularity over recent years is vested stock bonuses which offer employees with the opportunity to become partial owners of the company they work for. This enticement aims to align the employee’s interests with that of the company to ultimately promote loyalty and commitment to the firm.

What Is Vesting?

Before venturing into vested stock bonuses, it can be helpful to understand the concept of vesting itself. Vesting refers to the process whereby an employee gains ownership rights over employer-provided assets such as stocks or retirement contributions based on predetermined conditions. With stock bonuses, vesting will typically occur over a period known as the ‘vesting period’.

A vesting period refers to the duration during which an employee must remain with the company before they are able to access their vested stock bonuses. This is common practice for many UK companies. For example, an organisation may give an employee 1,000 shares of vested stock bonuses with a 4-year vesting schedule, where 25% of the shares become available after each year. Such a schedule is meant to incentivise employees to stay with the company long term in order to reap the benefits of their vested stock bonuses.

What Are Vested Stock Bonuses?

Vested stock bonuses, also known as stock grants or stock options, are a form of compensation where employees are awarded shares over a certain period. These bonuses are generally part of a larger compensation package so are more often seen within larger firms. By granting stock ownership, employees stand to benefit directly from the appreciation of the company’s stock value and are, therefore, more likely to work towards the growth and success of the company.

Can You Get A Mortgage Using Vested Stock Bonuses?

Yes it is possible to get a mortgage using vested stock bonuses in the UK, but it will be dependent on a number of factors including the lender themselves. Lenders will typically require clear evidence of the vested stock bonus’ regularity and consistency, as well as information regarding the vesting period. If you are considering using your vested stock bonus to obtain a mortgage, it is worth consulting with a mortgage advisor or broker who will be able to offer further guidance on your options and how to navigate your application.

Can You Get A UK Mortgage With A Deferred Bonus?

A deferred bonus in the UK refers to a portion of an employee’s compensation that is awarded by their employer but is not immediately accessible. Instead, it is withheld or deferred, often contingent on meeting certain conditions or remaining with the company for a predetermined period. If you are looking to secure a mortgage, lenders may be open to considering a deferred bonus as part of your income upon assessing eligibility, but this is dependent on the lender’s specific policies and terms.

How Do Mortgages With Vested Stock Bonuses Work?

When applying for a mortgage loan in the UK, you may look to use vested or vested shares of your employer’s stock as collateral. This means that you will pledge your ownership of these shares to secure the loan. In the event of you being unable to repay your mortgage, the lender will then be able to sell the vested shares to recover the debt. Such an arrangement is more common in certain sectors or for individuals with substantial stock holdings in their employer’s company, so it may not be the most affordable route for some borrowers. It is important to note that not all lenders will accept vested stocks as collateral, so be sure to research your lender before moving forward with the loan.

Feel free to contact the Magni Finance team if you are unsure about how to best utilise your vested stock bonus, we are always happy to help.


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