Guaranteed PAYE salary
Lenders will use 100% of guaranteed basic salary in their assessment. That is the starting point, and it is the most straightforward income to evidence. Three months’ payslips is the usual requirement.
Guaranteed allowances
Regular allowances that are the same each month and form a contractual part of pay can usually be used at 100%. Typical examples are a large-town or London weighting, or a car allowance. If the allowance is discretionary or varies, it will be treated more like bonus.
Bonus, commission and overtime
These are non-guaranteed. Many lenders use a proportion rather than 100%, and they will want to see a track record of both the level and the frequency. A single large bonus in the latest month is not the same as three years of consistent quarterly commission. P60s and older payslips are often what make this income usable in a report, rather than something we have to exclude or haircut heavily.
Self-employed and company directors
Where someone owns more than 20% of a business they are, for lender purposes, self-employed. The usual method is an average of the last two years’ taxable income on the personal return. Some lenders can consider retained profit in a limited company; many cannot. Shareholding, dividend history and the trend between year one and year two all affect the figure. A rising profit is treated differently from a falling one.
Maintenance and benefits
Spousal and child maintenance can be included where there is a reasonable expectation they will continue for a meaningful period. A court order, or a clear six-month payment history, makes this much easier. Some lenders will not use maintenance as the only income. State benefits depend on the type of benefit and how long it is likely to remain in payment.
Why this matters for the report
A capacity report that simply multiplies salary by a generic income multiple is not an assessment, and it will not survive a challenge. We apply current lender criteria to the actual income mix in front of us, and we say where the market is tight. That is the difference between a figure that helps a judge and a figure that the other side can dismiss.
Instruct a report
Single report £250. Joint report £450. Two affordability scenarios included; extra scenarios £25 each. Typically within 48 hours. Send a short enquiry and we will return the data-capture form.
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