Unpaid leave affects loan application
- Thread starter gach2
- Start date
Under the government legislation "Responsible Lending" the conversation needs to be had, The Bank/Broker need ensure the loan can be repaid without hardship. So a direct answer is yes it will effect your application. If you have your heart set on the investment property and taking the unpaid leave you will need to source a Lender/Broker who understands how to structure a loan application to maximise serviceability or a Lender/broker who can mitigate well through the banks credit department. Your last option is to find a lender/broker who knows how to play the game which does leave you with a real possibility of being placed in financial hardship if poorly done.
What you are asking is not impossible just requires a lender/broker who knows what they are doing.
A last option would be a non-mainstream lender who will basically lend you up to 80% providing you have security though rate will anywhere from 50bps to 200bps higher than your mainstream banks
What you are asking is not impossible just requires a lender/broker who knows what they are doing.
A last option would be a non-mainstream lender who will basically lend you up to 80% providing you have security though rate will anywhere from 50bps to 200bps higher than your mainstream banks
Most payslips include a "Year To Date" figure which is how much you've earned since the first of July of the current financial year. It's a very simply calculation to extrapolate this into an annualised salary figure.
If you take leave without pay, your YTD annualised salary will be lower. Lenders will at a minimum ask questions about the discrepancy. If the reason was something like maternity leave (which tends to be a once-off) it's not a big deal. If it's simply by choice, it will likely affect the outcome of the application.
Best to be upfront about it, you'll get a more favourable outcome if you allow them to dig a little deeper into the details.
If you take leave without pay, your YTD annualised salary will be lower. Lenders will at a minimum ask questions about the discrepancy. If the reason was something like maternity leave (which tends to be a once-off) it's not a big deal. If it's simply by choice, it will likely affect the outcome of the application.
Best to be upfront about it, you'll get a more favourable outcome if you allow them to dig a little deeper into the details.
If you're not generating an income at the time of applying for a loan (so on unpaid leave) it may cause hassles.
If you take unpaid leave - return to work, then apply for the loan - then (as Pete said) your YTD figure won't match up with your annual salary. This usually just requires an explanation (travel, study, mat leave, etc) but is quite easy to get around (usually).
Cheers
Jamie
How long is a few months? 3 months? 9? And are you applying before, during or after?
To have any hope of applying before, you would want to have substantial cash reserves available - think about how banks treat mum's on maternity leave. Even with government payments they don't like it. NO income makes them (understandably) twitchy.
To have any hope of applying before, you would want to have substantial cash reserves available - think about how banks treat mum's on maternity leave. Even with government payments they don't like it. NO income makes them (understandably) twitchy.
few months is between 3-6 months (may be able to take paid leave for part of it - though another trigger for timing is the fact im expecting a capital gain in the financial year)
Cash Reserves currently is quiet high (so would not have any troubles servicing for period of leave without pay)
Thanks for the replies but will have to work something out with employer and a broker when time comes closer (next financial year)
Properties to be purchased are of near neutral - positive geared
Cash Reserves currently is quiet high (so would not have any troubles servicing for period of leave without pay)
Thanks for the replies but will have to work something out with employer and a broker when time comes closer (next financial year)
Properties to be purchased are of near neutral - positive geared
