Dividends and Maternity Leave

Hi Brokers,
These are sort of two separate subjects rolled into one but:

Which lenders will allow business dividends in their servicing? Then how do they assess this? Say last financial year was 200k and the year before that 100k?

Secondly will any lenders allow maternity leave into their servicing based upon return to work in around 1 year? I heard NAB were soon going to introduce this?
If any, then how do they assess commission? Will they still take not this account based upon the latest financials before maternity leave?

Then will any lenders do both

 

what do you mean by 'business dividends'. If you have shares in a private company you are likely to be treated as self employed.

Paid maternity leave? I think most lenders will be ok if there is a job to return to. If the maternity leave person had been earning commission then this would likely cease while they are on leave so it probably wouldn't be taken into account at all.

 

Hey Terry,

Yes shares in a private company. I thought that may be the case. But if you can show a base salary and the business dividends on the past 2 tax returns then all this could be used?

Regarding maternity leave, sorry i should have been more clear. Say you do not receive maternity leave but you have a job to go back to (which you can get a director to sign off and note your salary). Can this be used?

 

If self employed then the person financials and the business entity financials will be jointly considered. Wages don't really matter in this situation.

Not sure about the maternity leave off the top of my head, but without income I don't think it would be counted.

 

You have lots of scenarios - are you sure you're not joining the swarms of PC brokers?

In regards to mat leave - you'll struggle with a one year gap - it's probably too long. NAB, ANZ and CBA are usually quite good with mat leave.

Cheers

Jamie

 

Not just yet Jamie and if I ever decided to leave my cushy IT job to be a broker, not sure I would do so on PC among all you gurus

All my scenarios are usually from conversations I have with friends. Admittedly they should seek professional advice but there is nothing wrong with getting some answers first. There are A LOT of brokers out there that I myself probably know more than. Especially when it comes to investing and structuring.

 

With maternity leave you can sometimes get it through via exception IF there's evidence of a return to work date and there's savings/funds evident to cover servicing in the meantime. It's not the easiest thing. As Jamie says, I think with a year gap you'll be struggling - better odds if it's 3 months or so. A lot can change in a year.

 

Maternity leave, Nab need 60 days to return to work via employment letter. CBA and ANZ will do any time limit as long as the client has savings to cover the shortfall in the meantime. Westpac look at maternity leave by exception, no LMI. Most of the other lenders, if they do it, wont consider any unpaid gaps, at best they will use the maternity leave actually paid in their calculator, if there is also a return to work letter.

 

Wonder if taking 12 weeks long service leave would raise any eyebrows?

 

On the self employed income ignore the actual dividends paid as these could be from retained profits which are not a reflection of how the business is currently trading. Could be 20 years worth of profits paid out over 2 years.

What you need to look for is the business profit before tax figure and addbacks including wages paid to yourself and things like depreciation (non cash) and one of expenses (non recurring) etc. This gives the total available income for distribution.

Re mat leave I've done 2 recently with > 1 year return dates but both had ample cash in bank to service the loans from savings for longer than this plus a partner earning good $$. Sub 80% LVR also.