Will Bank give desired home loan?

Sshanaz on 08/03/2015 - 14:10
Last edited 08/03/2015 - 14:10

Here is the story of my life.

I am interested to purchase property worth $600K in Sydney. I have saved around $130K for the deposit and therefore I wont require LMI.

The biggest concern is my income. I earn $55k as PAYG employee and $18K from sole trading business. The last year taxable income for partner was $4500. She has earned around $12k this year plus she is also getting parental leave which will add another $8k this financial year. In nutshell, my taxable income for this financial year is $73k and my wife's taxable income is $20k. Please note that we have two dependant kids.

I want to get your opinion if bank will give me required loan of $470k based on above incomes? I have also potential to show large business income and less expenses to increase the overall business income however it implies I pay more tax.

I am also concerned about how bank will consider business incomes as a sole trader but please note that my wife and I have lodged business income tax last year and we will do it again this year.

Is there something we can do different to ensure we get desired loan?

Financial

Comments

  • 2jzzzz on 08/03/2015 - 15:42
    +2

    How do all these people save so much damn money!?!

    • Sshanaz on 08/03/2015 - 15:52
      +2

      Parents contribution :)

      • 2jzzzz on 08/03/2015 - 16:19

        Ahh good work, at least it is going to a worthwhile investment.

  • lansalot on 08/03/2015 - 16:28
    +1

    From what I can see you'd be bang on the money!

    Jump onto any bank website and just punch your numbers into a calculator. Given you have to borrow less than 80% LMR you'd be considered very low risk. The only concern I'd have is that you also need to pay your stamp duty, settlement fees etc, and these will cut into your deposit.

    Also, if you have even a single credit card or loan of any type (including a HECS debt for yourself) then it'd be close to game over, as these committments would be added to your outgoings, thus reducing your borrowing power.

    As far as your partners income goes there'd be some things to consider. Banks don't care what she made last year, or even last month, they care what she is making now, tomorrow and into the future. With 2 kids I'd imagine you are getting some FTB, and yes this is included as income, as is the money she is receiving regularly from paid maternity leave.

    Banks will also do a 'before' and 'after' snapshot. So if the amount you have been setting aside as savings PLUS the amount you pay for rent is EQUAL TO OR LESS THAN the amount you'd be paying for your new mortgage, you should be able to get an approval.

    • Sshanaz on 08/03/2015 - 17:13

      I will like to add that I am buying new house so I think I don't need to pay any stump duty. I will get $15000 first home grant plus I receive FTB and these both benefits were not mentioned in original post and FTB was not included in the income I previously mentioned.

      I do have couple of credit cards but I will close them at the time of application. I do not have any other debt and I have always paid credit card on time. I do not recall paying even 1cent as interest on credit card for last 5 years.

      I have just tried ING Bank and Citibank online calculator and both are giving me desired value.

      I want assistance from people with existing home loan to see if there is a way to ensure I do not get rejected during formal application and if I need to consider any other factors.

      • lansalot on 08/03/2015 - 17:17

        Just be 100% completely honest and provide all the factual information they ask for. Last 2 payslips, income statement from centrelink (you can get this online), accountant details including P+L figures for sole trader business.

        Remember banks are in the business of handing you money, not denying you of it.

        • Sshanaz on 08/03/2015 - 17:22

          I lodge tax via E-tax even for sole trader business and therefore no accountant is available.

          Would it matter?

      • kingmw on 08/03/2015 - 22:33
        +1

        Would advise having a chat with a mortgage broker, they will know which banks/credit unions will allow your application through.

  • eagleanthony on 08/03/2015 - 18:44
    +1

    Total income is $93k. Banks generally can use 30% of income for repayment purposes.

    93x.3=$27,900

    Divide this by the interest rate of 4.68

    27900 / .0468
    a year divided by interest rate of 4.68 = $596k.

    So easily afford…

  • whoopdeedoo on 08/03/2015 - 21:46

    edited

  • Cheeper on 09/03/2015 - 02:50
    +1

    Just a word of advice… don't forget to add into your post mortgage personal budget for house insurance, rates, maintenance, etc… They may not seem like much but many have jumped into a house purchase planning to live on the red line and the whole experience has ended up being a nightmare.

    Anyway… hope you get there, nothing like your own home. :-)

  • tomleonhart on 09/03/2015 - 09:04

    Broker here.

    Just ran 2 serviceability calculators for CBA and Suncorp. Both passed with satisfactory result. This is based on what you have written here.

    We can assist you with your paper work if you're interest on getting loan through a broker. Note you don't pay us anything :)

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