Income that includes overtime for mortgage

dingdongavon

Hi,
We are looking at moving house but would need to borrow quite a bit more than our mortgage is now and wanted some advice on what we would likely be able to borrow.
My oh earns approx £22,000 a year but this includes overtime which he has always done and can vary between 20-25 hours a month. It isn't guarenteed but is available 99% ofthe time.How much of this would be taken in to account by lenders? Also if he increased his overtime between now and Sept when we are planning on moving ( due to fixed rate finishing), would it make much difference to what figures they use?

I am self employed and probably earn on average £5500-6000 a year although 2009/2010 was lower at £4600.

We want to borrow approx £108,000, will have £137,000 deposit to put down on the house which is £245,000.

Is it possible based on my figures to move? We are going to try and save every spare penny between now and then to try and reduce amount needed, and I have already costed for fees.

GMS

Different lenders assess overtime in different ways. Some will allow 50% of regular, some allow 100%, others will take none of it into account.

You may be best speaking to a broker to see what could be available

Burridge60

No money back no guarantee.

Guaranteed overtime you can guarantee forever. Dock Workers loved it they got paid and went home! How many Dock workers do you know?

There is no overtime that is guaranteed just like any job.

Local Government Workers are losing their jobs in droves. NHS workers are next. These were the guaranteed employments of the past.

Many lenders are now down valuing overtime and bonuses. Some were including 100% and some still do.

I would encourage you to examine your own budget and exclude the overtime. If you can afford the mortgage without the overtime that would be a much better position to be in than become a repossession statistic.

It is your mortgage and your budget it must fit at the end of the day. If you are uncomfortable then you shouldn't do it.

WhiteHorse

Never a good idea to include overtime as it may vanish overnight, no matter how secure you think it is. Bear in mind that interest rates will rise in the future, so you will need some slack.

Always go for the smallest mortgage. Start with a modest property and work your way up. In fact, if you have £137,000 as a deposit, why not buy somewhere smaller outright?

dingdongavon

We already have a 3 bed home which will have £77,000 left on it when the fixed rate finishes in Sept. The house we want to buy is much bigger but needs work doing to it so it is much cheaper than it would be otherwise and would therefore be completely out of our price range. It is owned by a family member who is downsizing. If we don't buy this house we won't be moving as we actually like our home now, but more space and the potential of the new home means it would be crazy not to go for it if it is viable.

I know we could afford the repayments as long as we can get a mortgage in the first place.

My oh delivers food to supermarkets ( everyone needs food ) and has been there 15 years. saturday overtime is guarenteed just not weekday overtime. He could do more saturdays to increase income that we could save,but it is getting the mortgage that I am worried about as I know our income isn't huge.

dimbo61

£108K is 5X his income and with you earning £5/6K and being self employed then you may well struggle.
the new place you want to buy is £245K and needs "doing up" as some one who has just had a property "done up" it cost me nearly £33K to rewire,new plumbing,plastering,new double glazing,gas central heating and building work to be done.
You really would be struggling with the mortgage never mind the refurb.
I would stay where you are and overpay like mad for the next 2/3 years to reduce your debt.
If you can manage to overpay by say £600/800 a month for 2 years you will then know that the BIG house is affordable

WhiteHorse

dingdongavon wrote: »

We already have a 3 bed home which will have £77,000 left on it ...

There's your answer. Stay put and pay it off.

And don't forget that you are relying on two, reliable incomes. Now factor in a serious illness.

dingdongavon

Whitehorse we can't pay it off as the money I mentioned we would have a deposit for the new house would be from selling our home, not money we have now.
Dimbo we borrowed more than we needed last time we remortgaged by mistake as I over estimated what we had left to pay so will be reducing the mortgage by that amount and more if we were to stay here, but we couldn't afford to pay £600-800 on top of mortgage.
The house is perfectly liveable and we know it would take a long time to get the work done, but we have time on our side and are willing to make sacrifices to get it done.

Burridge60

dingdongavon wrote: »

My oh delivers food to supermarkets ( everyone needs food ) and has been there 15 years. Saturday overtime is guaranteed just not weekday overtime. He could do more Saturdays to increase income that we could save,but it is getting the mortgage that I am worried about as I know our income isn't huge.

If your hubby was unable to work his sick pay would most likely only be based on his basic salary. HGV drivers have limitations on the hours they can work/drive I believe so there would be a limit to how much you could boost his income.

You are taking a lot of risks and would need a very good back up plan in the event that he is unable to work due to sickness or accident. An Emergency Fund for several months ideally six months mortgage and living costs! plus some insurance to protect you for longer periods of sickness should they occur. The emergency fund would also help if the overtime dried up.

Please focus more on the What Ifs before you consider the Can I's?