How much do kids affect living expenses, according to banks

Discussion in 'Loans & Mortgage Brokers' started by Seal, 28th Apr, 2016.

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  1. Seal

    Seal Well-Known Member

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    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 Well-Known Member

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  3. Scott No Mates

    Scott No Mates Well-Known Member

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    If it wasn't for the kids I'd spend more time in the pursuits I enjoy. ;)
     
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  4. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    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
     
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  5. Cbrgirl

    Cbrgirl Well-Known Member

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  6. larrylarry

    larrylarry Well-Known Member

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  7. RPI

    RPI SDA Provider, Town Planner, Former Property Lawyer

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    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 Well-Known Member

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    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 Active Member

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    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 Mortgage Broker Business Member

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    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:

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  11. Coota9

    Coota9 Well-Known Member

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    @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

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    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
     
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  13. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    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

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    thanks Peter, very helpful tables
     
  15. Redom

    Redom Mortgage Broker Business Plus Member

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    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.
     
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  16. Bran

    Bran Well-Known Member

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    Indeed! And the decrease in travel...
     
  17. Blacky

    Blacky Well-Known Member

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    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