Income Spliting and Loan Application

Discussion in 'Property Finance' started by maadha, 18th Oct, 2010.

  1. maadha

    maadha On the ladder... Finally.

    Joined:
    14th May, 2005
    Messages:
    81
    Location:
    Caringbah, Sydney NSW
    Hi all,

    Does income splitting have any effect on the loan application process?

    Example, I currently split my income with my wife via distributions from a trust. Does this effect the loan calculations and the way lenders assess your loan application as opposed to having a single income earner with a dependant?

    Thanks,
     
  2. HLE

    HLE Mortgage Broker

    Joined:
    15th Sep, 2010
    Messages:
    83
    Location:
    Sydney, NSW
    From a lender point of view this has two effects when compared to a standard PAYG income:

    • Your serviceability will increase, therefore you could afford to borrow more. This is because you will both be in a lower tax bracket compared to if you had received all of the income yourself.
    • Many lenders will view you as self employed, even if one main employer pays your income. Because of this you may need to provide additional documents such as two years tax returns and or an accountant's letter to verify what you are doing and that this is ongoing.

    It really depends on what the ultimate source of your income is as to exactly how they assess it.
     
  3. Rolf Latham

    Rolf Latham Member

    Joined:
    2nd Mar, 2001
    Messages:
    18,791
    Location:
    Confused = Sydney, Brisbane and Gold Coast
    Hi M

    U are safe :)

    2 years tax rtns and financial statements and ATO assessment notices and the lender will treat you similarly to those with a job

    ta
    rolf