If a good part of your pay comes from overtime, shift penalties or a bonus, the number on your payslip and the number a lender uses can be a long way apart.
How much overtime and allowance income counts depends on the lender. Some count regular overtime and allowances in full after a few months; others average them over two years or count only part, and bonuses often need two years of history.
On the same payslips, that can move borrowing power by tens of thousands, so the lender is chosen for how it reads your pay.
Part of the employment and income home loans guide.
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With your overtime, allowances and bonus counted the way the most suitable lender would count them, not the way the first one you ask happens to. Free, no credit check.
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Consistency is what is being tested, so the evidence is about pattern rather than peak. Expect to provide recent payslips showing year-to-date figures, and in most cases a PAYG summary or tax return covering the previous financial year.
Because most lenders read year-to-date figures, the point in the financial year at which you apply changes what your payslip shows. Applying early in the year, when year-to-date totals are small, gives a lender less to work with than applying later.
The most common disappointment is a buyer who has worked out their budget from a big pay period. Plan around the figure a lender will use, then treat anything above it as a buffer.
It is a less exciting number and a much more useful one.
How much overtime is shaded, and whether certain occupations are exempt from shading. How long the income must have been received before it counts. Whether year-to-date figures alone are enough or a prior year is also required. How allowances are classified.
Whether a bonus needs one year of history or two.
On the same payslips, those differences produce materially different maximums. This is the clearest case on the whole site for comparing a panel rather than approaching whichever bank you already use.
Read your payslips the way a lender will, and work out what each part of your income is worth in an assessment rather than in your bank account.
Yes, most do, but usually not all of it. Lenders apply a discount to allow for the possibility that overtime stops, commonly counting somewhere around 80 per cent of it, and most want to see it sustained for six to twelve months first.
By a number of lenders, yes. The reasoning is that overtime and shift penalties in essential services are a permanent feature of how the roster works rather than an occasional extra, so they can be counted more like base pay.
Six months is a common minimum and twelve months is safer, because at twelve months a lender can compare year-to-date figures against a full prior year. This is one of the more variable policies between lenders.
Usually, with two years of history, averaged and often shaded. A single strong bonus year rarely carries much weight on its own, because the lender cannot tell whether it repeats.
Usually not, if it reimburses a genuine cost you incur: lenders commonly disregard it, on the basis that the money is spent rather than available. Your payslip wording and your employer’s description both matter.
Thirty minutes covers what each part of your income is worth in an assessment, and which lenders read your pay structure most accurately.
