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does paying off SRO installments affect you negatively?

Discussion in 'Property Finance' started by TMNT, 1st Aug, 2016.

  1. TMNT

    TMNT Well-Known Member

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    long story short, I always pay my SRO obligations in installments over 6 months,

    you have to apply for it, ive always been accepted

    does this affect your credit or any other way?
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes, it is a debt and must be declared on loan applications. I take it you are also being charged interest and this interest would not be deductible - probably.
     
  3. Hodge

    Hodge Well-Known Member

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    Is this land tax?
     
  4. Redom

    Redom Mortgage Broker Business Member

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    Its likely going to be a case by case basis as to the actual impact it has and whether it needs to be in servicing calculators. I can speak for federal tax obligations and self employed instalments of tax debts.

    Under standard resi finance with the majors and for self employed, many like to pay off their yearly tax bill in monthly payments as part of managing their cash flow. Similar to an SRO obligation.

    This needs to be clearly explained and needs to have an assessor sign of on it as being OK. If you have a 7-10k outflow every month for the next year but only a 20k cash balance, than it can cause issues as they'll likely need to factor it into serviceability.

    If its purely a choice and you can demonstrate that you can pay it out anytime (e.g 500k cash balance), the assessor may wipe it from servicing altogether with an explanation and proof of funds.

    Presenting this on the front foot is a good idea too, making note of it clearly and addressing it with risk mitigations (proof of funds, accountant letter) is the best way to handle. Assessors will look at tax portals anyway (although this won't show anything for state based debts i believe), so its best to address upfront clearly.