Variable pay elements — overtime, commission, bonus and shift allowance — are treated differently by every UK lender. The averaging method, percentage accepted and evidence required all vary, and the right lender can materially increase borrowing capacity.
The scenario
Mr B from Bristol is a 34-year-old engineering supervisor. Basic PAYE salary £42,000. On top of that, over the previous 12 months he had earned £8,400 of paid overtime, £6,800 of monthly performance commission and a £2,800 annual bonus paid in March.
He was moving home and needed a £236,000 loan on a £310,000 purchase (24% deposit from sale proceeds).
Why this case was awkward
His own bank offered a decision-in-principle at £189,000, taking only basic salary and 50% of average overtime. That was £47,000 short. The client was ready to reduce the purchase price and give up his preferred property.
How UK lenders treat variable pay
- Lender A — 100% overtime (12-month average), 100% commission (12-month average), 50% of last bonus.
- Lender B — 60% of all variable pay averaged over 3 months.
- Lender C — 100% commission if monthly and consistent; 50% overtime; bonus excluded unless 2-year history.
- Lender D — basic salary only.
Same client, same income, same evidence — but assessable income ranges from £42,000 (Lender D) to £58,600 (Lender A). At a 4.5× multiple, that's a maximum-loan range of £189,000 to £263,700.
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Our approach
We ran the case through sourcing against Lender A's criteria. Evidence pack: 3 months' payslips (showing consistent monthly commission), last two P60s (showing consistent annual overtime and bonus) and the March bonus payslip. That gave assessable income of £42,000 + £8,400 + £6,800 + £1,400 = £58,600, supporting a maximum loan of £263,700 at 4.5× — comfortably above the £236,000 required.
Outcome
DIP was returned same day. Full mortgage offer followed 8 working days later at 76% LTV on a 5-year fixed product. Broker fee: £249. Client bought his preferred property.
Learnings for applicants with variable pay
- Never accept a maximum-loan figure from one lender as "the number". It rarely is.
- Regular monthly commission evidences well — build a consistent history if you can.
- Two P60s are worth having ready — annual bonus is often assessed off P60 evidence.
- Ask your broker specifically which averaging method each lender uses. It changes the answer.
Frequently Asked Questions
- Do lenders count overtime for mortgage affordability?
- Most UK lenders count some proportion of overtime — from 50% to 100% — provided you can evidence it consistently on payslips and P60s. A small number of lenders exclude overtime entirely.
- Is commission counted for a mortgage?
- Yes. Regular monthly commission that appears consistently on payslips is usually counted at 100% by lenders that specialise in variable pay, and at 50% by more cautious lenders.
- Will lenders count my annual bonus?
- Most lenders count some proportion of bonus (typically 50%) provided you have at least one to two years of history evidencing consistent payment.
Sources & References
- FCA MCOB affordability rules — Financial Conduct Authority
Anonymisation & consent
Client name, location and identifying details have been changed. Income figures, lender names and dates are indicative of the actual case handled by our advisers. Written and published with the client’s consent as an illustrative example — individual outcomes will vary based on your circumstances, lender criteria and market conditions at the time.
Published 24 July 2026 · Last reviewed 26 July 2026 by Matty Stevens · Compliance oversight: Primis Mortgage Network. Your home may be repossessed if you do not keep up repayments on your mortgage.
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