1/20/2024 0 Comments Living expenses loanOwner occupied property: Utilities, rates and related costs including tax levies, body corporate and strata fees.Recreation and entertainment: Take-out, pets, gifts, concerts, festivals, stage shows, opera, comedy etc.Medical health expenses: Doctors (GPs), dental, optometry, holistic medicine and specialists that fall outside of bulk billing or what’s covered by private health insurance.Childcare: Childcare centre and preschool fees, nanny fees and after school home care etc.Connections: Phone (landline), Internet, mobile, subscription-based television and other subscriptions.Transport: Public transport like buses, trains and taxis, petrol, registration, insurance, servicing and repairs.Investment property: Utilities, rates, repairs and related costs including tax levies, body corporate and strata fees (for units).Insurances: Health, home, home and contents, life, income, car, motorcycle and boat.Groceries: Meat, fruit, vegetables, cleaning products, milk, bread and toiletries.Education: Public, private and all associated costs including uniforms and textbooks.Clothing/personal care: Footwear, cosmetics, apparel, hygiene products and haircare etc. Generally speaking, you’ll need to declare the following monthly expenses: What expenses do I need to declare in my living expenses? You may want to also consider buying out your ex partner to further improve your borrowing power and allow you to build your property portfolio more easily. Luckily, some lenders will assess you at 50% of the debt using what is known as a common debt reducer. It’s totally illogical and targets borrowers who own multiple investment properties, in particular. The bank will also only take into account 50% of your rental income, which is actually shaved to around 80%. Joint debts with ex partners not on the home loan application are assessed by lenders as if the debts are 100% in your name.Įssentially, they’re assuming that your ex isn’t paying their share. What if I own a property with an ex partner? The good news is that we can assist you to build a strong case supported with evidence to show that your partner is financially-independent. This is an automatic process so a credit officer hasn’t actually assessed your application! If your living expenses are considered too high, the lender will flag your application. In the past, they based their decisions on “one-size-fits-all” benchmarks like the Household Expenditure Method (HEM). The problem is that lenders make a lot of assumptions when assessing your living expenses. This means they don’t meet the banks’ borrowing power (servicing) benchmarks and can’t afford the mortgage repayments for the amount they want to borrow. The property is in their name but when they apply to refinance their investment loan they’re knocked back because their living expenses are too high. Most lenders don’t use common sense!Ī common problem we see when banks assess living expenses for a couple is where one of the partners already owns one or two properties coming into the relationship. In some situations, you may be able to make reasonable reductions to your spending to improve your home loan borrowing power. A letter from their accountant confirming their income.Įffectively, this means you will be assessed as a single applicant rather than as a couple so you can borrow more.Ĭall us on 1300 889 743 or fill in our online enquiry form and we’ll apply with a lender that takes a common sense approach to your living expenses.To prove that they’re not financially-dependent, your wife, husband or partner can provide: We have lenders that can consider reducing the living expenses for your family on the basis that your partner is working and has their own income. Can you prove that your partner is not reliant on your income? Most lenders assume that borrowers in a spousal or de facto relationship are paying for their partner’s living expenses even if they’re not reliant on your income.ĭiscover how to increase your borrowing power when declaring living expenses for a couple. Calendar_today Last Updated: 31st May, 2021
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