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Basic serviceability calculator

Discussion in 'Property Finance' started by Otie, 8th Jan, 2017.

  1. Otie

    Otie Well-Known Member

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    does anyone know of a good basic serviceability calculator?
    Or any rules of thumb?
    Interested to see if there's one that you can input the basics, but something that is not as over generous as the online bank ones?
     
  2. datto

    datto Well-Known Member

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    Years ago I used to use the formula:

    A = b x 30%

    Where A is annual loan repayments and b is total annual income.

    To calculate borrowing capacity I used the formula:

    Z = A x 30 (years) /2

    Where Z is borrowing capacity, A is annual repayment amount.
     
  3. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    I've attached the ING calculator. It's one of the more basic ones and is reasonably conservative.

    Please don't make any financial decisions based on this calculator. Figuring out serviceability isn't something you can really do yourself. This calculator looks simple, but how do you know you're using the right numbers to begin with? The online calculators aren't particularly useful for a number of reasons. Get help from a professional.
     

    Attached Files:

    Last edited: 9th Jan, 2017
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  4. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Hi @Otie

    Are the calculations for an IP or a PPOR? If it's for a ppor and you have no other debt then the basic online calcs might give you an idea. If it's for an IP and you have existing mortgage debt then it's going to be very difficult accurately working out serviceability on your own.

    Cheers

    Jamie
     
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  5. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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  6. Otie

    Otie Well-Known Member

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    Yes, definitely need to speak to one of you, as we currently have a PPOR, IP and want to go for the second IP. We are self employed (but have been for over 10 years so not really an issue, but add backs will be needed I think for car depreciation, IP depreciation etc. I had a go at Peters ING spreadsheet, and realised that I need to speak to someone!
     
  7. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    For self employed you definitely do :)
     
  8. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Self employed gets fairly tricky. Lenders aren't consistent about that they will or won't accept as income and add-backs. There's so many ways to structure a business which leads to many more variations.

    The simplest form of serviceability is to just use your taxable income on the assessment notice, but it's rarely that simple and even that can have a lot more too it. It can be a mountain of paperwork just to figure out the first 'income' figure on the spreadsheet should be.
     
  9. Otie

    Otie Well-Known Member

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    Yes, as if we use the taxable income, it comes in quite a bit lower as they had the 20k instant depreciation write off this year etc
     
  10. TroySeven

    TroySeven Active Member

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    Any income/expense non-recurring usually is to be removed with mitigates.
    i.e. Capital gains, dividends, gross interest income, etc