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How do Commission Jobs Impact Investment Loans?

Discussion in 'General Property Chat' started by House, 16th Nov, 2015.

  1. House

    House Well-Known Member Premium Member

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    Not having any luck with the job hunt but have been offered a recruitment role with one of the biggest companies in the world.

    Entry level is a measly $45k + Comms (apparently about $20k). Comms is uncapped so room to increase the income as much as I want but as it would be unpredictable, how would the banks treat this kind of job? Would they look at the previous 6m/year of commission and average it out?
     
  2. D.T.

    D.T. Adelaide Property Manager Business Member

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    Probably the same as self employed - average of the last 2 years?
     
  3. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    12 mths to 2 years

    rare exception is ANZ with 90 days

    ta
    rolf
     
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  4. Michael_X

    Michael_X Mortgage Broker Business Member

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    Depends on the bank.

    ANZ for instance take 100% of commissions acceptable after 3 months, so good choice for those with this kind of pay structure.

    Cheers,
    Michael
     
    Last edited: 16th Nov, 2015
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  5. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    ANZ are good in this space....but if you already have IPs, you might struggle to service with them due to their lousy servicing calc....which admittedly is now an industry standard calculator these days.

    Cheers

    Jamie
     
  6. House

    House Well-Known Member Premium Member

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    Thanks for the quick responses all!

    Quite a relief that at least one of the Big 4 will assess it as is. As its uncapped it could even work in my favour, ready to work my ass off now I know what I want :)
     
  7. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    The problem with most commission jobs is the commissions can be unreliable. You could have a great month followed by next to nothing. The banks can't rely on an income if it is speculative (and neither should the borrower).

    Hence the banks want to see that the commission is being earned over a consistent period, which leads to them wanting to see at least 12 months in the job (in most cases as already explained).

    It can be painful for those in a new job, but there is a very reasonable logic behind these policies.

    PS. Not that it counts for much these days, but in addition to the ANZ, AMP are also fairly flexible on this - at least they used to be, nobody's touched them for months now.
     
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  8. Big Will

    Big Will Well-Known Member

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    I think the 90 days is considered if it is a similar role you had before.

    E.g. a REA moving from one firm to another they would be weighted really heavily on comms but as the work is very similar to their previous REA firm they would likely count the comms still.

    I am not a broker so take my thoughts with a pile of salt.
     
  9. Redom

    Redom Mortgage Broker Business Member

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    Note some of the commission income may have a haircut on it in this post APRA climate - inconsistent income is one area they did specifically mention/target - i.e. some will use 80% of it.
     
  10. Taku Ekanayake

    Taku Ekanayake Well-Known Member

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    Hey @AlexH,
    My broker advised using ANZ for my current purchase for this exact reason that they factor in 100% comms. I've also been at my role for less than a year and I work on base + comms.


    Cheers,

    Taku
     
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  11. jpcashflow

    jpcashflow Well-Known Member Business Member

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    Hi Alex,
    I just assisted a client of mine the other week in a similar situation. Lender just used his last PAYG Summary and his current YTD figure and worked out an average. There are some lenders who are better in this space then others.

    When I was working in real estate, I was on 100% commission and never had a issue in getting a loan.
     
  12. House

    House Well-Known Member Premium Member

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    Very surprised you got finance on 100% commission! How long were you in the job when you applied? Depends how good you are I suppose. Just left a comms only job... I was so bad I wouldn't have gotten finance for a place in Coober Pedy :eek:

    Preference is for steady, salaried jobs so I have more choice in lenders for when the time comes. But just in case, better start sharpening the sales skills!