Will lenders accept my overtime income for a mortgage?

Any general questions you might have in regards to loans and finance.
Joerooty
Posts: 9
Joined: Tue Mar 20, 2018 9:18 pm

Will lenders accept my overtime income for a mortgage?

Postby Joerooty » Fri Jun 08, 2018 12:35 pm

Hi team,
I want to buy a property. We have found a suitable 2-bedroom property in Geelong for $560,000 and wanted to bid for it. I earn $70,000 per annum including overtime and my partner makes $38,000 a year.

We wanted to confirm whether my overtime income is considered by the lenders while assessing the loan or not? I tried your calculator and if my overtime income is excluded, then we aren’t allowed to borrow as much as required. We want to borrow 90% of the property price.

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Otto Dargan
Mortgage Specialist
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Location: Sydney, Australia
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Re: Will lenders accept my overtime income for a mortgage?

Postby Otto Dargan » Fri Jun 08, 2018 1:49 pm

Hi Joerooty. Welcome to the forums.

Every lender has their guidelines as to how much overtime income they can accept.

Lenders don’t usually consider overtime income however they may acknowledge overtime income when assessing your loan if you can show that your overtime income is regular and substantial.

As a general rule, most lenders need to see at least six months history of overtime and will then accept around 50-80% of your overtime income.

Some lenders will use 100% of your overtime income if it is consistent and can be shown over a period of two years. Additionally, some lenders will use 100% of your income if your field of work is classified as an essential service.

Also note that borrowing 90% of the property price entails paying Lenders Mortgage Insurance (LMI). It is a one-off fee you have to pay when you borrow more than 80% LVR (Loan To Value Ratio).

In order to avoid the premium, you can borrow up to 95% of the property value or up to 105% using a guarantor.

We understand that overtime remuneration is a viable source of income. If you want to learn more about overtime income home loans, then you can have a look at our website or call us on 1300 889 743.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Joerooty
Posts: 9
Joined: Tue Mar 20, 2018 9:18 pm

Re: Will lenders accept my overtime income for a mortgage?

Postby Joerooty » Fri Jun 08, 2018 2:57 pm

I work as an emergency service officer at St. Vincent's Hospital Melbourne since September last year. I hope my job falls under their classification of emergency services, isn’t it?

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Otto Dargan
Mortgage Specialist
Posts: 7021
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Will lenders accept my overtime income for a mortgage?

Postby Otto Dargan » Fri Jun 08, 2018 3:56 pm

Hi Joerooty,

Select lenders consider specific fields of work as essential services and will take 100% of your overtime income. These professional fields include:
  • Healthcare including doctors and nurses
  • Police, Fire and Rescue
  • Paramedic and ambulance
  • Defence and armed forces
  • Corrective services
  • Education.
So, in your case, if you’re working as an emergency service officer, then some select lenders will consider all of your overtime income if you've been in your job for three months or more.

You’ll also need to provide your two recent payslips, a group certificate to show the consistency in the income. Also, some banks would require a letter from the employer confirming that you have received overtime income.

If you want to discuss which lenders take all of your overtime income for a home loan directly with one of our mortgage brokers, then you can give us a call on 1300 889 743 or enquire online.
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Joerooty
Posts: 9
Joined: Tue Mar 20, 2018 9:18 pm

Re: Will lenders accept my overtime income for a mortgage?

Postby Joerooty » Fri Jun 08, 2018 5:17 pm

Thanks for helping me and clarifying on this. I’ll call you guys by the end of the week to discuss my situation. Cheers.


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