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Employer provides rental or morgage subsidy - borrowing capacity

Discussion in 'Property Finance' started by bamute, 8th Mar, 2016.

  1. bamute

    bamute Member

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    The brokers will be up on this. Will the banks increase the borrowing power of a home loan application if the employer provides a home subsidy?
     
  2. tobe

    tobe Well-Known Member

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    some lenders might increase the gross or net income in their calculator. How does the employer provide the subsidy, is it salary sacrifice FBT?
     
  3. Redom

    Redom Mortgage Broker Business Member

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    Will depend on how its shown and what its for. If it comes out like an 'allowance', it may be allowed for servicing, but will need to be well explained and verified (letter/payslips). There may also be a time period and some discounting on it (80%) depending on the lender.

    Home living allowances are actually quite common for expats who move over. In most cases i've dealt with, haven't had an issue including this type of income for servicing.
     
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  4. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    If the subsidy is in the form of very little or no rent, or employer provided accomodation just a letter to verify is enough. Borrowing capacity is increased indirectly, b/c no rental payment or mortgage payment is taken into consideration. Some lenders may require a notional amount be used though, usually around $650/mth.
     
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Sounds like it may just be income.
     
  6. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Does your payslip show a line item for the subsidy?

    Cheers

    Jamie
     
  7. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    It'll definitely assist - dependent on how it's received/administered will determine how much of a bang for buck.

    Absolute best case is for employer owned accommodation with peppercorn rent, else it'll be treated as a form of income with a % accepted.
     
  8. bamute

    bamute Member

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    Ta all, it's paid for by the employee and then reimbursed once a year by the company.
     
  9. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    How long have you worked with your employer? If it's not something you've been paid yet, I don't think most lenders would treat it very generously (I could be wrong.)
    If they could see a couple of years history of the payment being made it would be easier to use.
     
  10. tobe

    tobe Well-Known Member

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    It'd be hard to use. You'd need to see it over a couple of years. It'd need to be consistent and part of your employment contract.
     
  11. Redom

    Redom Mortgage Broker Business Member

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    That will make it harder. Agree with others, if you want it included than you'll need to produce an employment letter and show some history of the payments coming in. Some lenders may be a bit more flexible than others, particularly sub 80%.