Starting from the 2nd of December, Nationwide building society have re-evaluated and revitalised their criteria for bonuses, commission income, and overtime on pay slips. What exactly do we mean by this? Well, historically and certainly in the last 24 months Nationwide have been cautious about non-standard employment contracts and extra income on payslips due to job uncertainty caused by the pandemic. The new changes to these things mean that more income will be considered when assessing a borrower’s affordability.
Nationwide have announced that these changes will be applied to all cases that have their first decision in principle on or after 2nd December, as well as cases which are reprocessed following an initial DIP decision. It’s worth noting that in April this year, Nationwide returned to allowing bonus, overtime, and commission income to be included as part of the mortgage affordability calculation after the pandemic. From 2nd December, Nationwide will be changing the way bonus, overtime and commission is assessed, which increases the amount that can be used in the affordability assessment.
Henry Jordan, director of mortgages at Nationwide has said: “As a responsible lender, we always ensure that borrowers can afford their mortgage payments both now and in the future. These latest enhancements to our affordability criteria mean we are well placed to support more people purchase their property as well as those looking for additional borrowing.”
On their most up to date criteria page, Nationwide have specified:
- For all new DIPs started on or after 2 December 2021 or existing applications which are amended, the following criteria will apply:
- For all applications where Bonus, Overtime or Commission is required, the average amount of any frequency will be applied.
- For any of the above to be acceptable it must be present on the latest payslip.
Provided the income is shown on the latest payslip, any remaining payslips not showing the income will be treated as £0 in the averaging. If the latest payslip doesn’t show a payment, it can’t be used. Please also note: For annual bonus and commission, both proofs must show a payment. For half yearly bonus and commission, at least 2 of the 4 proofs (including the most recent one) must show a payment.
If the income is not present on the latest payslip, then a subsequent payslip that shows the income must be provided once available. The income will then be calculated using the most recent payslip. For Weekly/Fortnightly paid applicants only – where no income is on the latest payslip, but the payslip clearly shows holiday/sick pay, you don’t need to obtain a subsequent payslip.
If you’re using a combination of the income (e.g. bonus and overtime), each type of income must be on the provided proofs. It’s important to ensure that the income is entered into the correct income type and with the correct frequency. For income not labelled bonus, overtime and commission see here.
If your job is heavily overtime, bonus or commission based it is always advisable to speak to an experienced mortgage advisor so that you go to the right mortgage lender for your loan. Feel free to give us a call on 02088771169 to talk through your options.