Whether you’re planning to buy your first home or investment property, or just want to upgrade to a larger dwelling, then it’s essential to maximise your borrowing capacity by fully considering all your income sources.
Banks and other lenders assess your supplementary income streams quite differently to your base salary. And each bank employs their own unique set of policies and criteria to determine how much they’re willing to lend.
A detailed appraisal of all your incomes sources is necessary to secure the most appropriate loan for your situation. All possible income sources need to be reviewed. Whether these income streams are assessed correctly or not could mean the difference between securing your dream home, or missing out to another buyer.
Here are 9 income sources that should be assessed:
1. Bonus Income
Do you earn a regular bonus at work? If you do, then don’t forget to include evidence of this additional income with your payslips or group certificates. But remember that most lenders will only consider bonus income if it’s paid quarterly or monthly. Annual bonuses may not always be accepted.
If your job involves steady commissions, then you can include this extra income when applying for finance. But in most cases, you’ll need to be able to show consistent commissions over your two most recent tax returns, or your Group Certificates and PAYG Summaries
Some companies offer employee benefit packages such as car allowances, shift allowances, and penalty allowances. Each lender assesses these allowances differently. Some may cap the car allowance at $5,000, even though your own car package could be $20,000 or more. It’s essential to ensure these allowances are correctly documented in your application.
4. Rental Income
If you already own an investment property, then make sure to include your rental income. Most lenders use 80% of the rent when calculating your borrowing power. Some banks account for negative gearing, while others don’t. If the property is jointly owned, the lender may only accept half the rent, while assuming you’re liable for all the debt.
5. Holiday Rental Income
Holiday homes also generate an income stream; however, this may not be as dependable as a regular investment property. The location of the dwelling, and whether you have declared the income in your tax returns for the previous two years will also be taken into consideration.
6. Share Dividends
A dividend is a regular payment generated by shares that you hold in the Australian or international equities markets. If you have a healthy share portfolio, then you can include this income stream in your application.
There are various different types of pension, and each must be assessed on a case-by-case basis. Some pensions will be allowed, while others may not be accepted. An experienced mortgage broker like Mortgage Corp can quickly identify the best lender to approach, in order to achieve the highest probability of acceptance for each type of pension.
8. Family Tax Benefit
If you have a dependent child younger than 16 years of age who is not receiving another government benefit, and your income is below a certain threshold, then you may be eligible for Family Tax Benefit A or B. Many lenders will include this income stream to determine your borrowing capacity, depending on the number of children you have, and their ages.
9. Child Support Payments
The Child Support Agency provides additional payments to qualified parents based on your income and the age of your children. Don’t overlook this source of income when applying for finance. It will need to be evidenced by court orders, agreements, or payment history over six months.
How Does Mortgage Corp Help You?
At Mortgage Corp, we take the time to thoroughly identify and appraise all sources of income for our clients, in order to secure the most suitable loan product in every case.
Evaluating these nine income sources is just the beginning. It’s also vital to understand the constantly evolving credit assessment policies used by all lenders. And that’s where an experienced mortgage broker Like Mortgage Corp can help.
We’ve earned ‘Premium Broker Status’ with many of Australia’s leading banks and lenders. This gives us access to products that are not always available through other brokers.
As premium brokers, we also have the ability to order upfront bank valuations, before we submit your finance application. This means your loan is processed much more efficiently, compared to average brokers. All of which could mean the difference between securing your dream home, or missing out to another buyer.
If you’re looking for premium discounted rates, more flexible finance options, and the ability to jump the queue so you’ll never miss an opportunity or suffer the frustration and stress of delays, but more importantly a loan correctly structured for long term investment success, request a Free Loan Structuring Strategy Session and let us guide you to build a solid property portfolio.
About Mortgage Corp
Based in Mount Waverley, Mortgage Corp is the most loved mortgage broking firm in Melbourne with consistent 5 star customer reviews. Mortgage Corp specialises in helping successful professionals and property investors maximise their return and strategically structure your loan for long term investment success.
While most banks and brokers focus on merely getting you a loan, Mortgage Corp is committed to getting you a comprehensive investment result. Request a Free Loan Strategy Session with our senior mortgage strategist Neil Carstairs today!
Mortgage Broker’s service is free, why not get a good one ? Mortgage Corp consistently receives 5 star customer reviews!
About Neil Carstairs
Neil is the founder of Mortgage Corp, an active property investor and awarding winning MFAA accredited finance broker with more than 10 years’ mortgage broking experience. Currently, Neil is one of only few MFAA Certified Mentors in VIC/TAS region.
He is known for his strategic approach to investing and ability to reach fast, successful outcomes for clients where his industry peers could not. Connect with Neil on LinkedIn.