Assessment of Income

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The lender will take 100% of a borrower’s base pay or income.  As duty of care or compliance is playing a more important role, lenders are now starting to scale back as to what percentage they will utilise of the following forms of income

  • Overtime
  • Penalty rates
  • Site Allowances
  • Commission

If a borrower can demonstrate that they have been in receipt of these incomes for say two years, then the lender is more likely to take 100% of this income.

With self-employed applicants the lender will utilise the average of the last two years profit (but no more than a 20% increase over the previous year) and then add back expenses such as:

  • Depreciation
  • Interest
  • Directors
  • Non recurring expenses

With rental income, the lender will generally take approximately 80% of the rental income.  By   the rental by 20% the lender is accounting for management fees and vacancy.

Government income.  Generally the lender will take 100% of Family Tax A&B for children up the age of approximately 14.  Lenders are more resistant to take into account income such as new start allowance, carer’s pension and invalid pensions, but this does vary from lender to lender.

Generally a lender will take 50-100% of child support income as long as it has been assessed by the child support agency and the borrower has been in receipt of the income for at least 6 months.

Acceptance of overseas income varies from lender to lender.

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