From: Duncan M

I thought I understood the National's serviceability calculation quite well.. A number of times I'd posed the question to our 'personal banker' as to what percentage of rent they allow you to use to service debt.. each time the answer was 100%. But it seems they allow you to add 100% of your rent to your PAYE income, of that total they allow you to use 25% to service debt.. not sure where they pulled this calculation from, its really not particularly logical..

We had the Commonwealth over during the week, they have a much more sensible calculation.. they allow you to reduce your monthly commitments by 70% of your rent, then they allow 40% of my PAYE income to be used to service the remaining debt..

Westpac seem even better.. based on your number of dependents they have an amount of money they think you need to live, as long as you have at least $1 left over this amount, you pass their serviceability test..

Rolf, what other models are there?

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Reply: 1
From: Jeremy Laws

My Westpac Private banker uses 70% of rental income - 60% in city. My NAB man uses 65-70%. I havent heard of adding rental to PAYE figures. St G uses 80%, as does ANZ. All these figures are from 'Private' bankers. They will adjust to suit though, esp when figures get bigger. You will find they avoid the 'too rent reliant' issue, by reducing the % they allow.
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Reply: 2
From: Rolf Latham

There are about as many permutations of service models as there are lenders and then even variations amongst them.

If you do not fit into the standard box of most lenders, then there is some flexibility.

Some lenders for example will allow interest deductions on an IP loan, This can help if you get across the line sometimes.
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