Q:
How much can I borrow?
Because different lenders have different
criteria for borrowing capacity there is
no standard formula. By filling
out our inquiry form and submitting it we
can manually work with you to find the
lender that meets your loan requirements.
We will consider income from a variety of
sources including Salary, Self Employed
Earnings, Dividends, Rental Income and any
other source of regular and recurring
income.
Q: What is
Genuine Savings
Lenders like to
see a borrowers' history of savings -
normally the minimum is 3% for first
home buyers or 5% for others of property
value and they like to see this saved
over a minimum of 3 months
Funds to be held in the
borrowers name and include:
» Funds held or accumulated in savings
accounts for
3 months or more
» Term deposits held for 3 months or
more
» Shares held for no less than the last
3 months
Exclusions from genuine
savings:
o
Advances on wages/commission from an
employer
o
Inheritance
o
Financing of a deposit
o
Builder discount/finance
o
Vendor discount/finance
o
Proceeds from sale of motor vehicles
o
Windfall gains
o
One-off government payments (e.g. baby
bonus, stimulus package payments)
If
genuine savings cannot be demonstrated
as per the above, the LVR must be less
than 90% + lenders mortgage insurance.
Q: What is LVR?
LVR stands for Loan to Value Ratio. It is
the ratio of the Loan Amount to the
Purchase price or Valuation Price. For
example, if your new property has been
valued at $100,000 and you are borrowing
$75,000 then the LVR is 75,000/100,000
which is 75%.
Q: What is
acceptable income
|
Salary and wages |
-
100% accepted if length of
employment criteria is met
|
|
Overtime |
-
50% may be used to assist in
serviceability if payment is
regular and is a condition
of employment
-
100% may be used where
employment is in the
Essential Services industry
(e.g. Ambulance, Police
Service, Nursing, etc.)
|
|
Shift allowance |
-
100% may be used only if it
is a condition of employment
and is an industry standard
|
|
Rental income |
-
80% of gross rental income
may be added to net
salary/wage income (50% of
gross rental income accepted
for high density and/or
inner city apartments. Refer
to High Density Apartments
Section 5.8.9 for further
details).
-
Where a significant portion
of a borrower’s income is
derived from rental income,
and the proposal is heavily
reliant on that amount to
meet servicing requirements,
the application may be
considered too rent reliant
-
Level of gross rental
accepted for servicing
should not exceed:
» 40% of gross salary or
wage income for incomes less
than $60,000
» 65% for incomes greater
than $60,000 and less than
$100,000 and
» 70% for incomes greater
than $100,000
|
|
Investment income (interest,
dividends) |
-
80% of income as
demonstrated in tax returns
– income level must be
evidenced over the past 2
years
|
|
Social Security
benefits/Government Pension |
-
100% accepted where it is
considered permanent for the
next five years
(unemployment
benefit/sickness benefits
are not acceptable)
|
|
Car allowance |
-
100% may be added to gross
taxable income
|
|
Fully maintained company car |
-
$5,000 p.a. may be added to
gross taxable income
|
|
Child Support/child maintenance |
-
100% accepted if the
maintenance agreement is
registered with the Child
Support Agency
-
Six months consistent
payments can be evidenced
via the borrower’s bank
account statements and
-
It is considered permanent
for the next five years
|
|
Self-Employed |
-
Borrowers must produce the
last 2 years business and
personal tax returns.
Income evidence must
demonstrate consistent
income levels for the years
under review, however, it
would not be unrealistic for
each year to reflect an
increase up to 20% in the
net profit. Where taxable
income has increased over
the last two years by less
than or equal to 20%, then
the latest year’s income is
to be used. Where taxable
income has increased over
the last two years by more
than 20%, then maximum of
120% of the previous year’s
income must be used.
|
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