Do any lenders take overtime into account?

matttye

I did search the forum but the last thread I could find on this was in 2011, so I thought things might have changed since then.

I'm training to be a police station representative and will eventually be earning a lot of money in out of hours. My colleague's base wage is £21k but he's a higher rate tax payer because of what he earns in overtime, so it's quite significant. He has been a qualified rep for 10 years, so it will be slightly different for me, but overtime will still be significant.

I'm just wondering if any lenders will take overtime into account, or if they will only take into account my base wage.

My colleague has been in his current job for about 6 years and has only had one or two months where he hasn't put in at least 10 cases on his overtime claim in all that time, so it's pretty steady overtime.

I suppose that even if they'll only take into account the base wage, it will at least help me save a bigger deposit.

Thanks in advance

dgtazzman

Most lenders will take (fixed/guaranteed) overtime into account, but they will not treat this the same as basic wages (i.e. they will only count an x percentage towards affordability calculations).

Example from the Halifax calculator on their website:

- With a basic income of £21000 and £19000 overtime per year, you can borrow £155520
- With a basic income of £40000 per year, you can borrow £192000

This indicates around 50% of overtime is taken into consideration in their calculations of how much you can borrow. I think all lenders work like this, but might use differing percentages.

matttye

dgtazzman wrote: »

Most lenders will take (fixed/guaranteed) overtime into account, but they will not treat this the same as basic wages (i.e. they will only count an x percentage towards affordability calculations).

Example from the Halifax calculator on their website:

- With a basic income of £21000 and £19000 overtime per year, you can borrow £155520
- With a basic income of £40000 per year, you can borrow £192000

This indicates around 50% of overtime is taken into consideration in their calculations of how much you can borrow. I think all lenders work like this, but might use differing percentages.

Thanks for your post.

I don't know if this would be classed as fixed/guaranteed overtime, as it's completely beyond our control.

Someone gets arrested out of office hours and asks to be represented. Whoever is on call then attends and gets paid for their attendance.

Do you think being able to supply several months wage slips showing consistent overtime would be enough for a lender to class it as fixed/guaranteed?

dgtazzman

Just put that there as that also falls under the same rules. I have guaranteed fixed overtime on an annual basis, it is written into my contract and must be paid to me, yet it still isn't treated the same as basic wages for mortgage calculations.

As long as you can produce history showing regular overtime payments, it should be fine. In my case they asked for 3 months of wage slips and 2 years worth of SA302's from HMRC. My employer was also kind enough to provide them with a reference letter explaining my wages and illustrating my projected wages over the next year, though they never really asked for it.