The short answer
Lenders can count your overtime if it’s regular. Here’s how banks assess overtime over 3 to 6 months or two years, and how to make it count.
Banks will count overtime toward your borrowing power if it’s regular. Most look at your last 3 or 6 months of payslips, depending on the lender, and annualise the overtime if it’s been consistent. If you don’t have that history this year, many lenders will use last year’s income statement instead.
How do lenders work out your overtime?
There are two common methods.
Year-to-date payslips. If your payslip shows 3 or 6 months year-to-date, and the overtime has been steady, the lender annualises it. They look at where you sit in the financial year and project it forward.
Last financial year. If you don’t have 3 or 6 months year-to-date, the lender can check your income statement from myGov. They compare your base pay with what you earned on top of it. Where they look at two years, they usually take the lower of the two.
Why consistency matters more than the amount
A lender wants confidence the overtime will continue. Steady overtime across several months is easy to rely on. A single big month, or overtime that stopped recently, is harder to count. Some lenders also count only part of your overtime, so two lenders can give you very different borrowing figures.
Worked example
Say your base salary is $80,000 and your year-to-date payslip at the end of December shows $6,000 of overtime over six months. A lender annualising that would add about $12,000, taking your assessable income to $92,000. If last year’s income statement only showed $8,000 of overtime, a lender using the lower of the two years would count $8,000 instead.
How to make your overtime count
Keep your latest payslips with year-to-date figures handy.
Download your income statements for the last two financial years from myGov.
Tell your broker if your overtime is seasonal, so they can time the application.
Ask your broker which lenders count overtime most favourably for your industry.
FAQs
Do all banks accept overtime income?
Most do, if it’s regular, but how much they count differs between lenders.
How many months of overtime do I need?
Usually 3 or 6 months of year-to-date history, or a full financial year.
Can I use overtime if I’ve just changed jobs?
It’s harder, because there’s no history yet. Talk to your broker about lenders that look at your previous role.
Related: How Do Banks Assess Casual Income? · Borrowing Power Calculator · Home loans
General information only. This article does not take into account your objectives, financial situation or needs, so consider whether it is appropriate for you and seek personal advice before acting. Elephant Financial Pty Ltd trading as Elephant Advisory is an authorised credit representative (ACR 487962) of Yellow Brick Road Aggregation Pty Ltd (formerly Vow Financial Pty Ltd) (ABN 66 138 789 161), Australian Credit Licence 390261.
Gav is the person you want in your corner when it comes to property finance. After years in banking and motor trade finance, he joined Elephant early and never looked back. He's passionate about combining property and finance to help clients achieve their goals through tailored financial structuring, and he's very serious about snacks at meetings.
