Securing a Home Loan with Centerlink Payments

Irate Monk on 06/08/2017 - 15:08
Last edited 09/08/2017 - 17:47

How practical is getting approval for a home loan based on centerlink payments?

With properties getting more and more expensive, the family in the below scenario doesn't want to wait till they are financially better off, to buy their first home.

Consider the following:

ABCD is the typical family (married heterosexual couple, no child or ex-partner support payments outgoing).
A and B are unemployed at the moment; on the dole so to speak.
C and D are their minor children.

Centerlink pays them Family Tax Benefit Part A+B and rental assistance = ~$600 per fortnight
They are renting and the rent evens out with the amount above.

They receive NewStart Allowance = ~ $900 per fortnight.

Even assuming the rental assistance part (around $170 per fortnight, out of the $600 mentioned earlier) from centerlink will stop if/when they move to their own home, rental expenses will be replaced by loan repayments, evening out more or less.

Can the above income amounts can be considered steady if the circumstances doesn't change?
A and B are confident of getting off the New Start Allowance soon (the point being uninterrupted loan repayments with or without NSA).

Will they be able to secure a home loan based on the above financials?
Does the numbers look OK to ensure mortgage payments indefinitely?
Which agencies/ banks are likely to approve a homeloan?
Is the overall picture sustainable?

Have you or anyone you know had experience on similar lines?
Please add your valuable comments.
Thanks.

EDIT

Thanks all for the enthusiastic comments.

Now that the discussion had digressed onto the ethics of home aspiration while on centerlink pay, the gist of the conversation can be condensed to the following question:

The toll on the public exchequer remaining exactly the same, how does it become unethical for a family on Centerlink support, to use that funds on a mortgage instead of as rent?

Financial

Comments

  • ipiok on 08/08/2017 - 20:04
    +2

    I knew a guy that managed to save enough money to buy a nice new car on centrelink…. really pissed me off considering I work my ass off and still have a car loan.

  • wtfnodeal on 08/08/2017 - 20:06

    Get a guarantor has work income no debts.

  • xoom on 08/08/2017 - 20:29
    +1

    The problem that people have with those on centrelink benefits is that if they get allowed to get loans for property against the benefits they receive it becomes a disincentive to get off the benefits. Why work when you can just stick your hand out to the goverment?

    If someone wants the goverment to pay for their studies. I am for it. All for the betterment of said individual. To make them that much more employable.

    This is why im for a limit or cap on how long one can be on benefits. Then change the time frame one receives benefits if they lose their job. Like if i were to lose my job now i could be up the creek without a paddle as i won't be eligible for benefits for some time. Why not make it if i lose my job this week. A week later im on benefits. Money i will use to reskill myself and pay the bills momentarily while i look for work.

    As a result i try to have a buffer of cash (saving) in case i do lose my job for some time.

    But xoom aren't you fortunate to have parents that can help you if you ever get stuck financially? While that maybe true i have lived my life as if that safety net dont exist. My bills. My expenses.

  • MementoMori on 08/08/2017 - 20:38
    +8

    Wow… my wife drives an hour each way to a job she hates and works 40 hours per week to earn her take home wage of $800 per week, about $35 more than these guys (and less, once you factor in car/petrol). It is no wonder people are trapped in the welfare cycle.

    This is a real problem here. This can't be doing good to their self esteem.

    • xoom on 08/08/2017 - 20:48

      But its not helped by the fact that some think the only jobs they will ever get pay well below what they can get on centrelink. That maybe the case if you never finished school.

      While others just roll their eyes at the prospect of working 40 hours to only get not much more than the centrelink benefits.

    • Hazzard on 09/08/2017 - 12:19
      +3

      Know a guy who refused to get a job because centre link would "cut" his payments. His whole family is on centre link. They bought a new house about 6 months ago. Go figure.

  • Matslurpee on 08/08/2017 - 21:48
    -4

    Many towns have cheap housing, so cheap that mortgage repayments are significantly cheaper than renting in the same area for a similar home.

    People have bought into the liberals anti welfare propaganda.

    Every Australian deserves their own home, the idea that only those willing/able to borrow large sums of money off the banks deserve to own their home is utterly insane.

    Home ownership should be a right.

    • [Deactivated] on 09/08/2017 - 08:45
      +5

      Um. I think you have rights and privileges gravely mistaken.

      We have a right to clean water.
      We have a right to vote.

      We don't have a right to a piece of land to fence away.
      We don't have a right to free construction hardware.
      We don't have a right to tradesmen services.

      Thus, we don't have a right to home ownership. We can work towards home ownership and pay our way there.

      • Matslurpee on 14/08/2017 - 21:12
        +1

        20th century thinking encapsulated in a single comment, kudos.

    • BobLim on 09/08/2017 - 11:27
      +1

      Nowhere is there written an obligation to borrow to buy a house (or indeed a car, education, or anything else). If you have the money, the agent will be delighted to take a bank cheque for the full amount. They probably don't even have to worry about where it came from.

      Let's just imagine that you do have a right to a home. That home is located on a 120sqm block in the WA desert, and consists of a tent plus whatever you build yourself. All good? Where do you propose the land and funds for this 'right' come from, given both are limited resources?

      FYI, in many countries freehold titles don't exist, so no one actually 'owns' their own home, just leases it in the very long term. Australians (and indeed the many foreigners who are allowed to buy our property) are very lucky that they actually do have a legally enforceable right to own property in perpetuity. The only part of the 'right' that doesn't currently exist is the bit where you get a home even when you do nothing to obtain it.

  • xoom on 08/08/2017 - 22:39
    +3

    I don't think anyone is saying the welfare should be removed. All people are saying is welfare should be for people to get themselves by when they are down and out so that they can get back up to earning their own way.

    How are people on benefits going to meet up with repayments when interest rates go up which is more likely than not?

    And to think people are ok with others using their tax dollars to pay off these mortgages. Id like a slice of that. Can i quit work be on centrelink benefits for good so all you tax payers can pay off my mortgage?

  • [Deactivated] on 09/08/2017 - 08:39
    +2

    Welfare payments should be a minimum to keep people out of trouble.

    The sentiment that it is there to help people grow until they can be self sufficient is a marketing spin. We just don't want to end up paying more for law enforcement and cleanup.

    What these people choose to do with their money is really up to them. If they can buy a house, go for it but I hope the payments would start decreasing as it is obvious that the payment is above and beyond keeping people out of trouble.

  • OzBestDeal on 09/08/2017 - 10:07
    +7

    Hmm let me see:
    $1500/fortnight
    no childcare to pay
    bills rebate
    cheap public transports
    no driving in rush hours
    no wasting money on petrol/public transports to commute
    no rushing to drop kids to school / childcare and rushing back to pick them up
    and I still have 24 hours for myself!!!

    DEAL!!!

    Going dole is more lucrative than ever!!
    What's wrong with this country

    • Panda222 on 09/08/2017 - 12:19
      +4

      That is so true, no point for me to commute for 1.5 hours each way (3 hours per day) for work if I can get that kind of money.

      Buy my house in the sticks, deck it out with solar panels and battery banks and make it energy efficient, pay off the car and then I would need bugger all to survive. Would loose rent assistance but would get the New Start allowance.

      The system is messed up.

    • Matslurpee on 14/08/2017 - 21:15

      Just curious, where did you pull the $1500 a fortnight number from?

      • OzBestDeal on 15/08/2017 - 09:18

        From OP above, $900 + $600

  • Randxyz123 on 09/08/2017 - 13:21
    +9

    Why can't your hypothetical family get a job so tax payers aren't paying for their deposit?

    There are heaps of students not getting Centrelink and heaps of others who actually need it yet this family is clearly getting too much.

    Of course I don't have any issue with those on the dole but imo the dole should be assistance if you have a disability and can't work normal hours not your form of income and it should be enough to get by, not enough to save for a deposit.

    I'll get negged for this but if you aren't looking for a job (and you're able bodied and don't have serious medical issues) then why on earth should tax payers fund your life ? In this case maybe one parent could stay home with the kids… I also think that unless you can afford to have kids then you shouldn't have them. I'm going to assume here that both parents were let go.

  • cupcake on 09/08/2017 - 14:03
    -1

    If you're able to live comfortably on Centrelink payments, then you're able to save up a deposit.

    Some people are just real good at saving money. Some live on a dozen eggs a week for $2. Use very little water and electricity etc.

    Then, there are some families who just have half a dozen kids and get $2k a fortnight. The parents don't work so they don't have to pay for childcare. Plus healthcare benefits etc.

    It would be great if everybody works and pays tax but the government support is there for people and families in need.

    If later on, they meet home loan criteria - then obviously they will try and buy a home.

    To answer your questions, you have to see a lender. They will want to see a savings history and payslips.

    The lesson here is to save, save, save. Even if you are not yet working. Some can do it.

  • billy77 on 09/08/2017 - 14:43
    +8

    As a tax paying battler, I find this post insulting.

    • cupcake on 09/08/2017 - 14:52

      Agree.

      Re: my post above. I'm just sayin.

      I am a tax-payer too, but I can see what the OP is asking.

  • Cheapo Moose on 09/08/2017 - 16:54
    +4

    Why should taxpayers service someone's mortgage?

    Get a job.

  • djmm on 09/08/2017 - 20:24
    -2

    wtf ppl can buy a home using government assistance money? whats wrong with australian policy?
    that money shouldve been given to more needy people.

  • Lando on 10/08/2017 - 10:38
    -5

    Cost of living in South Australia is much less than in Sydney/Melbourne.

    Get off this guy's back. He isn't doing anything wrong and he isn't being paid too much. Most of you are salary people paying barely any tax. Get off your high horses.

  • SupeNintendoChalmers on 10/08/2017 - 14:13

    I'm guessing OP is a former Westpac employee?

    • xoom on 10/08/2017 - 18:08

      At least they have an 80k high yielding investment and the respect of the now former colleagues.

  • Matslurpee on 14/08/2017 - 21:23

    So many ignorant comments about how much people get on newstart…

    Newstart is roughly $540 per fortnight for an adult over 21.

    $270 per week.

    That is to pay rent, utility bills, food/groceries and transportation costs.

    • Ughhh on 15/08/2017 - 10:45
      +1

      Op wrote how much that family was getting… No one's making up numbers..

  • Welda on 15/08/2017 - 18:24

    It is unethical.

    Why? To secure that type of loan you would still need a deposit.

    If you have enough money for a house deposit - you won't qualify for Centrelink. They use assets to determine eligibility - not just income. If they're on Centrelink with over $X in the bank it is because they lied about their eligibility for it.

    Similarly, if you save enough up a certain amount (of your payments or otherwise) - they will be reduced/stop.

    Centrelink isn't meant to be used by middle class people who refuse to use their savings.

  • [Deactivated] on 21/08/2017 - 07:46

    So that's where my tax money goes. Me and my wife earn little more than that and we have to work our ass off.

    • xoom on 21/08/2017 - 08:00

      Yeah. Better quit your job now and get a mortgage. Then let these tax payers pay off your mortgage off.

      • [Deactivated] on 21/08/2017 - 18:10

        Yeah mate. Thank you in advance.

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