Join Australia's most dynamic and respected property investment community

How much do kids affect living expenses, according to banks

Discussion in 'Property Finance' started by Seal, 28th Apr, 2016.

  1. Seal

    Seal Well-Known Member

    Joined:
    10th Jul, 2015
    Posts:
    163
    Location:
    NSW
    Are there any guidelines on how lenders work out how much your kids apparently cost when working out your finance? Is it different for teenage kids cf little ones. And what happens when they turn 18?
     
  2. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    2,458
    Location:
    Sydney & Gold Coast
  3. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,551
    Location:
    Sydney or NSW or Australia
    If it wasn't for the kids I'd spend more time in the pursuits I enjoy. ;)
     
    Seal likes this.
  4. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,143
    Location:
    Canberra and Sydney
    As a general rule - it's around $300 to $400 per month for each kid.

    However - that's very general - and most lenders have built in other metrics for working out minimum living expenses (postcode and income comes into play).

    Also - if your declared living expenses are higher than the lenders minimum - they'll use your figure.

    Cheers

    Jamie
     
    Nick Valsamis and Seal like this.
  5. Cbrgirl

    Cbrgirl Well-Known Member

    Joined:
    18th Mar, 2016
    Posts:
    56
    Location:
    Away
  6. larrylarry

    larrylarry Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    3,501
    Location:
    Sydney
  7. RPI

    RPI Property Lawyer, Town Planner Business Member

    Joined:
    19th Jun, 2015
    Posts:
    712
    Location:
    Brisbane
    My 5 x $400 = $2,000 a month
    Sounds on the light side to me in reality but great if that is what bank takes
     
  8. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    1,167
    Location:
    Adelaide, SA
    Floating around $330-500 - with scaled living expenses the cost of living calculations are skyrocketing at the moment.

    Children <18 are counted as dependent, after this generally not considered in servicing calculations. If you have a genuine dependent child (imagine disability etc), they are counted as a dependent adult which can be $1400-2200 per month easily.
     
  9. dean2012ad

    dean2012ad Member

    Joined:
    31st Mar, 2016
    Posts:
    20
    Location:
    NSW
    Each lender has different amounts and scales.
    Last refinance <11 yo was considered less per month. Which is true.
    Two kids under the age 4 cost us probably less than $300/month combined.
     
  10. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,096
    Location:
    Melbourne, Nationwide
    Almost all lenders are using HEM tables to determine minimum costs of living. The figures are a combination of family structure, income and location. Family structure means single or couple adults and the number of childres. Income is obvious and location is dependant on the state, as well as rural or metro.

    I posted Westpacs interpretation a while ago, but here they are. It'll allow you to see how much each child costs according to Westpacs definitions. Table 1 is for singles, table 2 is for couples.
     

    Attached Files:

    ellejay and Seal like this.
  11. Coota9

    Coota9 Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    970
    Location:
    Melbourne
    @Peter_Tersteeg

    What do the different ranges relate to in the table?

    Tables.PNG

    EDIT-I see must be number of dependants..
     
  12. Blacky

    Blacky Well-Known Member

    Joined:
    25th Jun, 2015
    Posts:
    1,103
    Location:
    Bali
    Am I the only one who actually spends less now we have a kid?
    The little guy is in bed at around 7pm each night. So there goes our 3-4nights/week eating out at resturants and going out for a few drinks.
    A big night is now sitting on the couch waiting till 9pm comes around just cos its embarrising to be in bed at 8pm. :oops:

    He probably saves me about $500/week. :D:p

    Blacky
     
    albanga, mr500, Bran and 4 others like this.
  13. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,096
    Location:
    Melbourne, Nationwide
    Yes, it's the number of dependants. Probably the most precise answer you'll get to the original question, but it's not the same answer for everyone.
     
  14. Seal

    Seal Well-Known Member

    Joined:
    10th Jul, 2015
    Posts:
    163
    Location:
    NSW
    thanks Peter, very helpful tables
     
  15. Redom

    Redom Mortgage Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    853
    Location:
    Sydney (West) and Canberra
    As a guide, the monthly increase in expense equates to around a $35-70k in borrowing power drop on a single transaction. The bandwidth is quite wide as others have touched on a sliding scale associated with income/location that lenders are using nowadays.

    Its usually a lot more as theres often a corresponding period of an income drop too.
     
    Seal likes this.
  16. Bran

    Bran Well-Known Member

    Joined:
    20th Jun, 2015
    Posts:
    3,213
    Location:
    At work
    Indeed! And the decrease in travel...
     
  17. Blacky

    Blacky Well-Known Member

    Joined:
    25th Jun, 2015
    Posts:
    1,103
    Location:
    Bali
    Hardly. Our son turned 1 in January while we were in Japan. It was the 11th country he has visited and he has been to some of those multiple times. He has done over 40flights already.

    We took a flight sabbatical since then and haven't been anywhere. Next week we are off to Bali for 3 weeks. We will stop on the way for a few days in Turkey and then Singapore. He has been to all three countries already - so they won't add to the number.

    Blacky