200 hours a month of overtime, what will lender think?

AndyDufresne

I have a bit of a strange situation. My base salary is about £23k, but I do a huge amount of overtime out of choice. 

For the last 3 months I have been working 80-100 hour weeks, so between 320-400 hours of work a month. I get paid overtime at the same hourly rate as what my salary is equivalent to. My payslips show this and are all consistent. 

My question is how will a lender see this? My concern is that they’ll think that the overtime that I’m doing is only to increase my mortgage affordability (and that I’ll later drop it) and will therefore not account for it much at all in affordability calculations, or that they’ll just suspect mortgage fraud as (admittedly) most people can’t realistically do the hours that I’m doing. 

Any ideas on what my affordability would be roughly?

kingstreet

You would perhaps need to evidence this level of overtime over a year or two and if able to do so, you may get 100% of it taken into account rather than the usual 50%.

Get in touch with a broker to establish what can be done. Impossible to estimate affordability at this stage.

Thrugelmir

320 hours plus a month. Unsustainable. 

[Deleted User]

If this level of overtime was only on the last 3 payslips but wasnt on any before that and the p60 didnt support any level of overtime I wouldnt even let it get as far as a lender.  That would look very clear that you had only done that amount of overtime to get a mortgage approved so i would refuse to submit a case.  

If you can show it is sustainable then thats different.  How many payslips would show sustainability is an almost impossible question without the case infront of me but probably at least 6 and likely more depending on what ytd and/or p60 says.

I do have clients who have very high overtime at certain times in the year. Tends to be agriculture workers mainly.  Its not impossible but it would really depend on the whole case

AndyDufresne

Deleted_User said:

If this level of overtime was only on the last 3 payslips but wasnt on any before that and the p60 didnt support any level of overtime I wouldnt even let it get as far as a lender.  That would look very clear that you had only done that amount of overtime to get a mortgage approved so i would refuse to submit a case.  

If you can show it is sustainable then thats different.  How many payslips would show sustainability is an almost impossible question without the case infront of me but probably at least 6 and likely more depending on what ytd and/or p60 says.

I do have clients who have very high overtime at certain times in the year. Tends to be agriculture workers mainly.  Its not impossible but it would really depend on the whole case

So you wouldn’t let it get as far as a lender because they would likely decline the application altogether?

What about if the affordability that I’m looking for is only slightly above what the base salary would afford me?

AndyDufresne

To be clear, I’ve done this overtime to help build up a deposit really, not primarily to increase my affordability. 

Let’s say that I’m looking to buy a £130k property with an 80% LTV, that means that the 4.5x limit is beyond what I’m looking to borrow. Does the overtime negatively affect this, even though the loan is still within my affordability without the overtime? 

getmore4less

How many hours of overtime would you need regularly to get back to 4.5x.

Can you show a history of fairly regular over time (during normal times if your employment got hit by covid).

if you can show a lifestyle sustainable on basic and all overtime going into savings that should help.

[Deleted User]

AndyDufresne said:

Deleted_User said:

If this level of overtime was only on the last 3 payslips but wasnt on any before that and the p60 didnt support any level of overtime I wouldnt even let it get as far as a lender.  That would look very clear that you had only done that amount of overtime to get a mortgage approved so i would refuse to submit a case.  

If you can show it is sustainable then thats different.  How many payslips would show sustainability is an almost impossible question without the case infront of me but probably at least 6 and likely more depending on what ytd and/or p60 says.

I do have clients who have very high overtime at certain times in the year. Tends to be agriculture workers mainly.  Its not impossible but it would really depend on the whole case

So you wouldn’t let it get as far as a lender because they would likely decline the application altogether?

What about if the affordability that I’m looking for is only slightly above what the base salary would afford me?

I meant i wouldnt let it get to a lender as i dont want a black mark that im introducing dodgy inflated income to them. 

If overtime isn't needed for affordability i think it would be workable with the right lender 

AndyDufresne

Deleted_User said:

AndyDufresne said:

Deleted_User said:

If this level of overtime was only on the last 3 payslips but wasnt on any before that and the p60 didnt support any level of overtime I wouldnt even let it get as far as a lender.  That would look very clear that you had only done that amount of overtime to get a mortgage approved so i would refuse to submit a case.  

If you can show it is sustainable then thats different.  How many payslips would show sustainability is an almost impossible question without the case infront of me but probably at least 6 and likely more depending on what ytd and/or p60 says.

I do have clients who have very high overtime at certain times in the year. Tends to be agriculture workers mainly.  Its not impossible but it would really depend on the whole case

So you wouldn’t let it get as far as a lender because they would likely decline the application altogether?

What about if the affordability that I’m looking for is only slightly above what the base salary would afford me?

I meant i wouldnt let it get to a lender as i dont want a black mark that im introducing dodgy inflated income to them. 

If overtime isn't needed for affordability i think it would be workable with the right lender 

That’s what I was worried about, i.e. the lender might think it is fraudulent income and just not decide to take on the perceived risk. 

The overtime wouldn’t really be needed for affordability, no, but I do wonder if lenders would just straight up reject my application because it looked too unusual/risky, even if the loan was within my affordability without the overtime. 

I have only had my current job contract for about 3 months, the one before that was at the same employer but my payslips show way less overtime. 

kingstreet

A broker will typically only use additional income if it is needed for affordability. We routinely leave out overtime, bonus etc if it isn't needed. You are on the borderline of £104k on basic alone.

AndyDufresne

kingstreet said:

A broker will typically only use additional income if it is needed for affordability. We routinely leave out overtime, bonus etc if it isn't needed. You are on the borderline of £104k on basic alone.

The payslip will still show it though, so that could still spook the lender right?

Also, wouldn’t that be fraud by non-disclosure, due to a potential sustainability risk from doing so much overtime being omitted?