'Unsocial hours' payment included in mortgage loan?

Suzkin

A friend of mine works unsociable hours and wants to sell his house and buy something bigger. He is contracted to work full time unsocial hours, 36 hours a week. He has a 'basic' salary, with an enhancement of about £6-7k per year on top for working unsocial hours. This arrangement is part of his contract / terms & conditions.

Would the enhancement part of his salary be included in his annual earnings by a mortgage lender for the purposes of raising the loan?

Senior_Paper_Monitor

If the above statements could be verified I would tend to put this all within basic salary - happy to argue that one with an underwriter any day.

GMS

If the payment is guaranteed then most lenders would allow it. Depends how they viewed it though, some would allow all of it, others would allow 50% of it.

Suzkin

GMS wrote: »

If the payment is guaranteed then most lenders would allow it. Depends how they viewed it though, some would allow all of it, others would allow 50% of it.

Payment is guaranteed.

Crinz

Seems to fall under the 'shift allowance' bracket so might have to go in there. Halifax would use 60% of this amount for calculation purposes

Suzkin

Why would Halifax only consider it 60% ? What is the reasoning behind this? (The enhanced hours/payment would not be 'taken away'!)

Senior_Paper_Monitor

All lenders definitions of acceptable income and the percentage used in affordability criteria vary and, as Crinz indicates, Halifax offer 60% on 'shift allowance' (I would still be willing to argue - on your original description - that this is a core contract salary adjustment rather than 'shift allowance'):



Typically the following allowances are taken into consideration when assessing income on further advances:

• 60% of of additional duty hours, mortgage subsidy, town, area and car allowance, attendance allowance
• 60% of maintenance payments, disability living allowance, incapacity benefit, industrial injuries disability allowance, foster carer allowance, guardians allowance or invalid carer allowance. Income from housing benefit and council tax benefit cannot be used
• 100% of basic salary can be used where the applicant is employed on either a fixed term, short term or probationary contract. Income from seasonal, temporary, or piecework contracts or income from profit-related pay cannot be used
• 60% of overtime, bonus, commission & shift allowances
• 60% of Child Benefit can also be used and should be keyed as WFTC on the online system
• 60% of Child Tax Credits
• 100% of Working Tax Credits

Where possible I would prefer to pick a lender who would allow 100% without the argument, I use Abbey as an example here:

Primary income (100% of income)
Gross basic Other Permanent contract of employment
Fixed term contracts
Basic salary
Pensions and annuities
Employed income (Salary) for director
of a limited company
Net profit of a sole trader/partnership
Second job in the same line of work as the primary jobLondon weighting
Large town allowance
Shift allowance
Employer’s mortgage subsidy
Housing allowance
Car allowance
Dividends for directors (>20% shareholding only)
DWP/HMRC benefits guaranteed for life
Working tax credit
Child tax credit1
Secondary income (50% of income)
Overtime
Child benefit
Second job not in the same line as work as the primary job
Bonuses that are paid monthly or
less frequently
Performance related bonuses
Commissions
Discretionary mortgage subsidies
and housing allowances
Investment income
Maintenance payments
Non-guaranteed DWP benefits,
eg Carer's allowance
Rental income from
mortgage free property
Rental income in excess of 150%
of the mortgage payment
Fostering income

but if a better deal was available by going to another lender I reckon its a worthwhile fight and one that would normally be won with the corrrect approach to the lender.

Suzkin

Thanks very much Senior Paper Monitor.