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.
9 Income Sources That will help you Boost Your Borrowing Power
9 Income Sources That will help you Boost Your Borrowing Power
Here are 9 income sources that you need to assess:
- 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/ may not always be accepted by all banks or lenders and this may be subjected to a shading off by 20-25% depending on the lender.
- Commission
If your job involves earning a 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 for the lender to accept this income.
- Allowances
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 submission by the broker or banker.
4. Rental Income
If you already own an investment property, then make sure to include your rental income. Most lenders use 75/80% 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 100% of the debt.
- 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 may be taken into consideration depending on the lender.
- 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 by providing proof as per tax lodgement & NOA .
- Pensions
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 considered. An experienced mortgage broker like DBIJ Finance can quickly identify the best lender to approach, in order to achieve the highest probability of acceptance for each type of pension.
- 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 income 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 and their respective ages.
- 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.
We at DBIJ 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 by putting ourselves in to your shoes.
Evaluating these nine income sources is just the beginning of the process as it’s more vital to understand the constantly evolving credit assessment policies used by all lenders. And that’s where an experienced mortgage broker Like DBIJ can help.
We are a ‘Premium Broker ’ with many of Australia’s leading banks and lenders. This gives us access to products that are not always, available through other brokers. As a premium brokers, we also have the ability to order upfront bank valuations, before we submit your finance application. This means we have the capacity to leverage off your income with available equity in your existing property that will enable to borrow more and contribute less along with the bank your loan is processed with 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 and let us guide you to build a solid property portfolio.
DBIJ specializes 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, DBIJ is committed to getting you a comprehensive investment result. Request an appointment with senior mortgage strategist Suresh Rakheja today.
