Hey Brokers,
I was just curious how commission and bonuses are calculated when working out serviceability?
A couple of scenarios I have been playing in my head.
Scenario 1
Employee on a base of 50k and in the last financial year made an additional 30k on commission. This is reflected in the payment summary. Commission however is quite up and down, one month might be $500 and the next $3000.
Will lenders only consider recent commission or will they take the combined total of the past financial year? Therefore would calculate this serviceability at 80k.
This then brings me to my second question, what happens if someone has only been in their job for say 3 months and in that time has earned a lot of commission? Using the above scenario again, a base of 50k but in the past 3 months has earned 5k commission each month for a total of 15k. Will the lender look at this as 50k base + 5k*12months = 60k commision for a total of 110k?
Commissions and Bonuses just seem risky for a lender and can be quite seasonal so I was just curious how they calculate there effect on serviceability.
Thanks in advance
I was just curious how commission and bonuses are calculated when working out serviceability?
A couple of scenarios I have been playing in my head.
Scenario 1
Employee on a base of 50k and in the last financial year made an additional 30k on commission. This is reflected in the payment summary. Commission however is quite up and down, one month might be $500 and the next $3000.
Will lenders only consider recent commission or will they take the combined total of the past financial year? Therefore would calculate this serviceability at 80k.
This then brings me to my second question, what happens if someone has only been in their job for say 3 months and in that time has earned a lot of commission? Using the above scenario again, a base of 50k but in the past 3 months has earned 5k commission each month for a total of 15k. Will the lender look at this as 50k base + 5k*12months = 60k commision for a total of 110k?
Commissions and Bonuses just seem risky for a lender and can be quite seasonal so I was just curious how they calculate there effect on serviceability.
Thanks in advance