Ever heard of an RSU mortgage – or a restricted stock units mortgage, to give it its full name?
No, then you’re not alone. And we’re not surprised, either. The truth is that most people aren’t aware of what they are, as they’re a specialist mortgage that tends to appeal to a niche audience (more on that shortly).
However, we’ve recently had a spike in the number of people wishing to apply for an RSU mortgage, so maybe they’re becoming less niche than they once were.
With that in mind, and as RSU mortgages seemingly hit the mainstream (in Surrey, at least), we thought a piece that shines a light on this lesser-known mortgage might be of interest.
What is an RSU mortgage?
To understand what an RSU mortgage is, you first have to understand what the RSU bit means.
Restricted stock units (RSUs) are simply methods of paying an employee. However, instead of paying them a salary, a company offers shares – or stock – either at an agreed point in time, or when performance criteria has been met.
Whilst we can’t comment on the tax implications of RSUs, what we can say is this form of compensation is typically used be technology firms, finance firms and start-ups (where cash might not be at the ready in the short-term).
What are the benefits of an RSU mortgage?
Let’s say you’ve just landed a role in a start-up that is paying you 70% of your £100,000 package in RSUs and 30% in salary. However, you’ve just found the perfect property that requires you to take out a £500,000 mortgage.
With standard mortgages, you wouldn’t be considered for a £500,000 loan for two reasons. Firstly, lenders generally want to see evidence of regular income. Secondly, a £500,000 mortgage on a £30,000 salary is quite an ask.
An RSU mortgage lender, however, will factor the RSU component – in as much as they will consider your vested or expected RSU income, too. So, rather than getting a mortgage with £30,000 (the salary component), you can actually apply for a mortgage with £100,000 (the salary and RSU component).
Essentially, RSU mortgages allow borrowers to avoid being penalised – or discounted altogether – by lenders if a large component of their income is reliant on RSUs.
What are the disadvantages of an RSU mortgage?
Borrowers may face stricter borrowing criteria or have to pay higher interest rates. They may also be required to put down a larger deposit.
It’s also likely that you’ll be required to prepare more paperwork than those applying for standard mortgages … and this is where our team of Guildford mortgage brokers comes in.
Choosing an RSU mortgage broker
Given the specialist nature of this type of mortgage, you’ll need to choose an RSU mortgage broker – or at least one that has experience of working with lenders that offer this type of lending.
At Complete Mortgages, for example, our team of Surrey mortgage brokers are all equipped to handle the RSU mortgage application process on your behalf.
And, as this type of mortgage can be quite admin-heavy, it means that all admin required to get your mortgage over the line is handled by us.
If you’re thinking of applying for an RSU mortgage – or would like RSU mortgage advice – the contact our team of award-winning Guildford mortgage advisers on 01483 238280 or by e-mailing info@complete-mortgages.co.uk.
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