Regular overtime, bonus or commission can sometimes help you borrow more for a mortgage, but lenders do not all treat variable income in the same way.
The important questions are how often the extra income is paid, how consistent it has been, whether it is likely to continue and how the lender calculates the amount it is prepared to use for affordability.
Can overtime, bonus or commission count towards a mortgage?
Potentially, yes. MoneyHelper confirms that lenders can take into account income from overtime, commission and bonus payments when assessing mortgage affordability, alongside basic salary and other earnings.
However, lenders usually want evidence that the income is genuinely established rather than relying on one unusually high month.
How much of my variable income will a lender use?
That depends on the lender and the type of payment.
Some lenders may use an average based on recent payslips. Others may compare the latest year with an earlier period and use the lower figure. The approach can also differ depending on whether the payment is weekly, monthly, quarterly, half-yearly or annual.
For example, Nationwide currently publishes a specific evidence framework for bonus, overtime and commission. It averages the income and asks for different numbers of payslips depending on payment frequency. Halifax also publishes separate treatment for monthly and less frequent bonus or commission income.
What evidence might I need?
Depending on the lender, you may be asked for:
- recent consecutive payslips;
- older payslips or award statements where bonus or commission is paid less frequently;
- a recent P60;
- bank statements showing the income being received;
- an employer letter where required; and
- evidence that the income is expected to continue.
The more variable the income, the more important the evidence becomes.
What if my overtime changes every month?
This is common, particularly for healthcare workers, shift workers, engineers, transport staff and people whose hours fluctuate.
A lender may average the income over a period rather than use the highest month. Some lenders may also reduce or ignore overtime if it has recently fallen or if there is not enough history to show that it is sustainable.
What if I get an annual bonus?
Annual bonuses can still be considered, but lenders may want a longer history because there are fewer payment points to assess.
Nationwide’s current published evidence requirements, for example, ask for two consecutive annual payslips or employer award statements where annual bonus or commission is being used. Halifax also says that less frequent bonus or commission income is assessed using the lower of the amount received in the latest 12 months or the average over the last two years.
Does commission income work differently?
It can.
Commission can form a large part of income in sales, recruitment, finance, estate agency and many other roles. If the commission is regular and well evidenced, some lenders may be comfortable using a significant proportion of it.
If the commission has only recently started, varies sharply or depends on exceptional performance, the lender may take a more cautious view.
Can a second job also be included?
Potentially. MoneyHelper says lenders can take other earnings into account, including income from a second job.
Again, the lender may want to see how long the second job has been held, whether the hours are sustainable and whether the income is likely to continue alongside the main employment.
Why the lender choice matters
Two applicants with the same total annual income can receive very different borrowing outcomes if one lender uses more of their overtime or commission than another.
That is why simply entering a headline annual figure into a mortgage calculator can be misleading where a large part of the income is variable.
Should I wait until I have more history?
Not always.
If the variable income is recent, waiting may improve the evidence available, but it is worth checking current lender criteria before assuming you cannot proceed. In some cases the existing history may already be enough.
How TLA Finance can help
TLA Finance can review mortgage applications where overtime, bonus, commission or second-job income is important to affordability. We can look at the payment history, evidence available, basic salary, deposit, credit profile and wider commitments before considering lenders whose criteria may fit the way you are actually paid.
Visit our mortgage services page or contact TLA Finance to discuss your circumstances.
Important: Mortgage availability and lender criteria can change. Your home may be repossessed if you do not keep up repayments on your mortgage. This article is general information and is not a personal mortgage recommendation.
