HEM Tables

Discussion in 'Loans & Mortgage Brokers' started by Peter_Tersteeg, 31st Jul, 2019.

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  1. rksing

    rksing Well-Known Member

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    Im not an expert or a broker, but would assume 'joint' is for example two mates, etc buying together. I.e. their living expenses are independent of each other. Whereas 'joint with spouse' assumes or caters for expenses being shared and no double ups for living expenses like rent, utilities, etc
     
  2. Lacrim

    Lacrim Well-Known Member

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  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    No relationship to hem
     
  4. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Lacrim and Lucki like this.
  5. Lacrim

    Lacrim Well-Known Member

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    I'd suggest they are not being overly uptight about expenses bc they've decided to be...suspect they're being watched. Once rulings like this put the issue to rest, they'll start relaxing a little more on this front.
     
  6. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    It will take a while, but I agree. I've been telling lenders for years that there needs to be some rationalisation about how living expenses are determined and treated. This gives them some flexibility on the issue.
     
  7. shorty

    shorty Well-Known Member

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    I'm surprised ASIC bothered to take such a stupid case to court. Glad common sense prevailed.
     
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  8. property_geek

    property_geek Well-Known Member

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    "Joint" table is somewhat consistent with "Single" table.
    If single person earning $290k spends $4036 per month then two persons with $145k each may be spending $2434 each (creator of table assumes that poor people spend less).

    I say 'somewhat' because looking at first table a single person on $145k net spends $3,336 (not $2,434 as I mentioned above). So it's still not fully consistent.


    However, "Joint" table doesn't look consistent with "single" table at all.
    How can single person earning $290k spends $4036 per month while a couple earning $290k (combined) spend only $2434?

    experts??
     
  9. Redom

    Redom Mortgage Broker Business Plus Member

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  10. JohnPropChat

    JohnPropChat Well-Known Member

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  11. AJP

    AJP Well-Known Member

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    Thanks Peter!
     
  12. Cimbom

    Cimbom Well-Known Member

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    I think HEM is unrealistically low for people on average incomes. High income people probably have more of an argument to make about the accuracy of the figures.
     
  13. Sloth Inc

    Sloth Inc Member

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    It's almost as if individual circumstances vary.

    Some high incomes cost money to sustain, and not in a tax deductable sense, more so related to time, sanity, and not burning out. Yeah, you could catch the bus instead of an uber, you could forgo your CBD carpark. You could cancel your fortnightly cleaning service and do your own car servicing.

    But if you're working a high stress job 70+ hrs a week to bring home 300+ net a year, a lot of those discretionary expenses aren't really discretionary at all. You could cut back 20k a year and cost yourself a breakdown/career change, or miss that 100k bonus. If you're taking home 300+ passively or on a 9to5, then yeah.

    I think the same thing exists on lower wages as well, discretionary expenses that aren't all that discretionary in some circumstances.
     
  14. Cimbom

    Cimbom Well-Known Member

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    Not really. Look at the expenses for a couple, no kids, making 50-65k net which would be about average I think. That table says they spend $300/week which is ridiculously low. That's probably closer to the expenses of a couple on Centrelink benefits.
     
  15. krusty900

    krusty900 Active Member

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    I still don’t get the table. My partner and I are pretty close to the figures for joint. No way we could halve that because we are spouse.
     
  16. J A

    J A New Member

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    Hi all,

    A bit late to the party but...

    Stumbled across this thread while searching for the latest HEM tables (Thanks to OP in advance)!

    Confusing at first but first the first column has two options (a) Your location and (b) number of dependents.

    Part (a) in terms of location you either live in one of two 'types' of areas in All of Australia, "Remote", and then anywhere else that is not classified as Remote. (Would have to do some more Googling to find out how many Km's out of a major city fits the definition of remote.

    Part (b) is the corresponding number of dependents you have i.e .0, 1, 2, 3 etc.

    Simply pick your location and the corresponding row for the number of dependents and scroll across to the column with your After Tax Income (Excluding Rental Income) , and that value is your HEM estimate.

    In other words when you fill out an application your expenses need to come in HIGHER than the HEM estimate / value for your application to be believable.

    Cheers!
     
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  17. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    and for your banker/broker to stay out of ASIC trouble.

    I have clients on rice and lentils where we can prove expenses that are <50 % of hem, based on sanity simple savings rate of x thousand per mth .......... but we cant lodge the loan that way.

    We need to add a 50 % or more " asic buffer" to be compliant....... sad really

    ta

    rofl
     
  18. Dev76

    Dev76 New Member

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    Interesting...I always was checking the website homeloanexperts website
     
  19. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    At least one lender will actually reprimand and possibly revoke a brokers accreditation if we lodge too many applications with living expenses below the HEM figure.
     
  20. euro73

    euro73 Well-Known Member Business Member

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    I was at a PD Day yesterday where multiple lenders were discussing how they "think" this will get a lot of lender focus again early next year. They reasoned that ASIC is apparently asking for increased reporting from lenders around HEMS. Several of the lenders spoke about how ASIC is starting to set expectations that only 30% of all loans should have living expenses at HEMS.... and 70% should be above HEMS... are increasingly asking for "please explains" if that isnt coming through in lender reporting

    I've no idea whether that is just scaremongering or whether ASIC are genuinely promoting these sorts of targets with lenders ...but it does suggest that ASIC is still laser focused on living expenses

    That's hardly surprising. The Royal Commission would have been embarrassing for them.... all those things they didn't police for all those years... They need to be seen to be much more aggressive and proactive these days, or risk losing funding and /or relevance. This is something they can use to show their "value" as a regulator.... so it seems to me they'll continue to make a big deal of how lenders asses living expenses for some time to come.