Mortgage Declined Due to Reduced Overtime: What Evidence Can Help
A mortgage declined due to reduced overtime can be frustrating, particularly if overtime has formed part of your income for years. In many cases, the decline is not because overtime is unacceptable, but because lenders are unsure whether it is reliable enough to support long-term repayments.
This guide explains how lenders assess overtime income, why reductions can trigger a decline, and what evidence can help strengthen a future application.
How lenders view overtime income
Overtime is usually treated as variable income rather than guaranteed pay.
Lenders typically assess overtime by looking at:
- Consistency over time
- Whether overtime is contractual or discretionary
- How recently overtime levels have changed
- Whether it is essential to meet affordability
Where overtime is stable and long-standing, many lenders will include some or all of it. Where it has reduced recently, lenders may become cautious.
Why reduced overtime can lead to a mortgage decline
Affordability stress testing
Lenders test whether repayments would still be affordable if variable income drops further.
A recent reduction can suggest that overtime is no longer dependable.
Reliance on overtime
If affordability only works when overtime is included, a reduction may cause the application to fail stress tests.
Recent changes matter most
Lenders usually focus on the most recent three to six months of income.
Even a short-term drop can outweigh a longer positive history.
Is reduced overtime treated the same as a pay cut?
Not exactly.
Key differences:
- Base salary is usually prioritised
- Overtime is often averaged or discounted
- Reduced overtime is seen as a risk indicator, not a loss of employment
This means the issue may be mitigated with the right evidence rather than requiring a full income recovery.
What evidence can help if overtime has reduced?
1. Longer-term income history
Providing evidence that overtime has been consistent over a longer period can help offset short-term dips.
Useful documents include:
- Twelve months of payslips
- Employer income summaries
- P60s showing historical totals
This helps lenders assess whether the reduction is temporary or structural.
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2. Employer confirmation
A letter from your employer can be powerful if it confirms:
- Overtime is still available
- The recent reduction was temporary
- Your role normally includes overtime
Lenders value third-party confirmation over applicant explanations alone.
3. Clear separation of base pay and overtime
Clarity matters.
Payslips should clearly show:
- Basic salary
- Overtime payments
- Any allowances or bonuses
This helps underwriters calculate averages accurately rather than excluding income entirely.
4. Evidence of affordability without overtime
Some lenders may still proceed if affordability works primarily on basic pay.
Reducing borrowing expectations or increasing deposit size can help demonstrate:
- Lower risk
- Greater resilience
- Reduced reliance on variable income
5. Time and consistency
If overtime has already stabilised at a new level, allowing statements and payslips to show consistency can improve outcomes.
Many lenders prefer:
- Three months of stable income at the new level
- Six months where reductions were significant
Should you wait before reapplying?
In many cases, yes.
Reapplying immediately after a reduction often leads to the same result.
Allowing time for:
- Income patterns to stabilise
- Evidence to build
- Employer confirmation to be obtained
can materially improve lender confidence.
Does this affect all lenders the same way?
No.
Differences include:
- How overtime is averaged
- Whether discretionary overtime is accepted
- How recent changes are weighted
Some lenders take a more flexible view where overall employment is secure and income remains sufficient.
Understanding lender criteria is often key to avoiding repeat declines.
What if your mortgage has already been declined?
A decline due to reduced overtime does not mean a mortgage is no longer possible.
However, applying again without:
- Additional evidence
- Time for income patterns to settle
- Adjusted expectations
often results in the same outcome.
You can learn more about income assessment in our guide on how lenders assess variable income.
Professional advice can help determine when your application is realistically ready to proceed again.
Key takeaways
- Overtime is usually treated as variable income
- Recent reductions carry more weight than older history
- Lenders focus on sustainability, not short-term explanations
- Employer confirmation and longer history can help
- Time and consistency often improve outcomes
This guide provides general information only. Personalised mortgage advice should always come from a regulated mortgage adviser.
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Important information: Mortgage Bridge provides information only and acts as a mortgage introducer. We do not provide mortgage advice or make lender recommendations. We can introduce you to an FCA-regulated mortgage adviser who can provide personalised mortgage advice.