Serviceability
Anyone currently help me with serviceability ratios? I remember when I first took out my home loan it used to be that no more than 30% could be allocated to loan repayments. Then they seemed to stretch to 40-45% if you were buying investment properties and including rental income. Clearly, however, as your salary rises your cost of living does not necessarily rise. I.e., if you gross $400k a year (I wish) and have $300k allocated to loan repayments you are hardly going to be on the breadline on the remaining $100k.
Whenever I apply to a loan I always seem to be short by some phenomenal amount of money (mysteriously $900 p.m.) This is clearly ridiculous because the tax deductions etc usually refund me this amount at the end of the year anyway. Presumably, initial serviceability is worked out taking into account the tax you pay on gross salary but what do the banks do when your deductions mean that you have no taxable income to speak of?
I'm confused. When assessing serviceability is it unreasonable to allocate 50 or 60 or 70% to loan repayments because you can live more than comfortably on the remaining 30%?
Donna L.
Anyone currently help me with serviceability ratios? I remember when I first took out my home loan it used to be that no more than 30% could be allocated to loan repayments. Then they seemed to stretch to 40-45% if you were buying investment properties and including rental income. Clearly, however, as your salary rises your cost of living does not necessarily rise. I.e., if you gross $400k a year (I wish) and have $300k allocated to loan repayments you are hardly going to be on the breadline on the remaining $100k.
Whenever I apply to a loan I always seem to be short by some phenomenal amount of money (mysteriously $900 p.m.) This is clearly ridiculous because the tax deductions etc usually refund me this amount at the end of the year anyway. Presumably, initial serviceability is worked out taking into account the tax you pay on gross salary but what do the banks do when your deductions mean that you have no taxable income to speak of?
I'm confused. When assessing serviceability is it unreasonable to allocate 50 or 60 or 70% to loan repayments because you can live more than comfortably on the remaining 30%?
Donna L.