Hey again,
I’ve been told that most institutions will take somewhere between 30-35% of your working income into acct when calculating home much you can borrow.
I live with parents and my expenses are around 25% of my income. Is there any chance that if i can prove this figure will remain constant for a few years, a bank or CU might let me repay more than 35%? (ie 40-50%?)
Any comments welcome, thanks!
Steve.ps: As the only person online at the moment MortgageHunter, i’d appreciate your thoughts! [
]“Knowledge is Power”
The formula so to speak that the banks use, is pretty much a part of their lending policy, so I wouldn’t bother. Read no chance. However, when you speak to a mortgage broker there are many different lending products and lenders, so they will able to advise the lender best for your needs.
For example, I think St george & CBA when calculating serviceability, add back in tax benefits (from investing), whilst most others do not.
James
Young Investor,
I think the percentage ýou´re referring to is the amount they presume for living expenses. And even if you could produce a stat dec from your parents saying you´d stay with them for a few years, banks and credit providers will only take into account your situation now- they don´t work on projections for the future… they´re more likely to work on the assumption that we all spend about 30% of our income on bills etc etc wherever we live…
kay henry
Steve,
All lenders use different serviceability formulas.
You can visit each bank to see where you fit or see a broker who has software for them all.
All the best,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Hi
Most lenders will not take into account your reduced expenses becuase the loan term is for 30 years and they would assume that you would not live at your parents place for the next 30 years.
The only real reduction in living expense they may take into account are:
– company car.
– salary sacrafice benefits.Cheers
Stu
Hey Stu,
Is salary sacrificing where you voluntarily contribute extra cash to your super, or some other area, or both?
Steve.
“Knowledge is Power”
Depending on the LVR, some banks will allow you go go into the red in their serviceability models – but not by much.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
As Terry has eluded to, some banks will not just run your income through a formula but actually have a good look at your situation and what you can afford.
There is not much room to move with owner occupied property – but you should get some leniency with investment.
Matt Anderson
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