What Counts as Income on a Mortgage Application

It’s Not Just About Salary

Let’s be honest, applying for a mortgage can be a confusing process. One of the first things a lender will ask is, “How much do you earn?” But it’s not just about the number on your payslip. They want to know how consistent, reliable, and provable your income is.

If you’re paid through overtime, commission, shift work, or self-employment earnings, a standard application may not fully capture the picture. That’s where the proper guidance makes a real difference.

At Drummonds Finance Group, we’ve helped clients from Oxford, Bicester, and across the UK secure mortgages by presenting their income clearly to lenders who understand it. Let’s break down what counts.

What Income Do Lenders Accept?

Salary

Your basic salary is usually accepted in full. If you're employed on a permanent contract and receive a monthly salary, lenders are comfortable using this as your main income figure. If you’re part-time or on a fixed-term contract, most lenders will still consider your salary, but may request additional documents to demonstrate its long-term nature.

Oxford example: Sarah, a physiotherapist at John Radcliffe Hospital, works 32 hours a week on a fixed-term NHS contract. We secured a mortgage using her full income and her employment letter. No stress, no confusion.

Overtime and Shift Pay

If you regularly work overtime or unsociable hours, that income should also be considered. But not all lenders treat it equally. Some will average your extra income over six or twelve months. Others may only accept half of it unless it appears every month.

Case in point: Tom, a Heathrow-based engineer, works a rotating shift pattern and earns a decent amount in overtime. His bank ignored that income. We did not. By using a twelve-month payslip average, we secured him a mortgage 28% higher than the initial offer.

Bonuses and Commission

Work in sales or a performance-based job? Commissions and bonuses can be counted, especially if you have a history of earning them. Lenders prefer to see this income over a two-year period, but some will accept one year with strong supporting evidence.

If your bonus is guaranteed or part of your contract, that works in your favour. We help clients clearly explain these earnings, using P60S and employer letters as needed.

Self-Employed Income

If you run your own business or freelance, your income may fluctuate, but that does not mean you’re out of options. Most lenders will require one to two years of account history. Sole traders are typically assessed on their net profit, while limited company directors can use their salary and dividends.

We also work with lenders who will consider retained profit or day rates. We tailor your application to suit your business structure.

Local case: James, a website designer from Bicester, had only been trading for just over a year. We helped him secure a mortgage based on his first tax return, business forecast, and accountant’s confirmation. He now owns his first home.

Rental Income

If you let out a property, lenders want to see that the income is stable. For buy-to-let mortgages, rental income is a key factor. Most lenders require tenancy agreements and proof of rent being deposited into your bank account.

Some lenders also accept rental income as secondary income for residential mortgages, although this varies.

Pension Income

If you are retired or approaching retirement, your pension income is just as important. This can include state pensions, workplace pensions, annuities, and drawdown income. Lenders often request a pension statement, an award letter, or bank statements.

We’ve helped many later-life borrowers in Oxfordshire use their pension income to downsize, remortgage, or invest in property.

Other Sources of Income

There are additional income streams that some lenders accept:

• Child maintenance, especially when it’s legally documented or part of a long-term agreement

• Investment income, if it’s regular and provable

• A second job, as long as you’ve held it for a reasonable length of time

• Certain benefits, such as Disability Living Allowance, Universal Credit, or Personal Independence Payments. Acceptance varies, but some specialist lenders are open to it

What Is Usually Not Counted?

Some income types rarely count:

• Cash-in-hand work with no records

• Brand new jobs or businesses with no track record

• Short-term freelance projects without contracts

• Gifts or one-off windfalls

• Rental income without a tenancy agreement

That said, we help clients explain unusual income situations all the time. Just because a bank says no, it doesn't mean no one else will say yes.

Why the Way You Present Income Matters

One of the primary reasons mortgage applications are declined is not because of the income itself, but rather how it is presented. If a lender doesn’t understand your payslip, contract, or self-employed accounts, they may underestimate what you can afford.

At Drummonds Finance Group, we specialise in making your income clear and easy to understand. We know which lenders accept which documents, and how to put forward a strong case that reflects your actual financial position.

Real Mortgage Approvals Happen Every Day

We’ve helped pilots with overseas contracts, NHS nurses working night shifts, estate agents earning commission, and business owners reinvesting in their companies.

Your income may be non-traditional, but that does not mean it is unreliable. We’ll help you prove that it works.

Contact us