Clydesdale Bank will now accept variable income such as bonus, commission or overtime in its mortgage affordability assessment.

Variable income must have been received after 2 December 2020 to show that customers have continued to receive variable income through the pandemic.

Clydesdale will use 60 per cent of any bonus, commission or overtime and calculations will depend on when the income was received.

For variable pay received annually, six monthly or quarterly, the bank will use 60 per cent of the two-year average. If the most recent year is lower, it will use 60 per cent of that.

If variable pay is received monthly, 60 per cent of the variable pay from the lowest of the two most recent payslips will be used. If the year-to-date figure is lower, the bank will use 60 per cent of the variable pay showing in the YTD.

Documentation

The most recent bonus payslip must be dated 2 December 2020 or later. For variable pay received annually, Clydesdale will also need the 2020 P60 while six monthly or quarterly variable pay requires the two most recent P60s.

Clydesdale can accept compensation statements or bonus payslips instead of P60s, as long as they cover a two-year record.

For variable pay received monthly, the banks wants to see the most recent two months’ payslips, at least one of which must be dated 2 December 2020 or later.

If some variable income was received before 2 December and some after Clydesdale will calculate it the same way.

This updated policy is live on the bank’s affordability calculator and AIP.

The variable pay policy at Virgin Money, whose parent company is Clydesdale Bank, is currently being reviewed and there will be an update in the New Year.