Loan servicing - treatment of dependents

Discussion in 'Loans & Mortgage Brokers' started by ooneil, 8th Dec, 2016.

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  1. ooneil

    ooneil Member

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    Hi everyone,

    I have a question around how banks treat the expenses for dependents for someone who is separated and does not have them full time. I have 2 children under 7 which adds ~$1,000 per month to living expenses for serviceability, however I only have the kids for an average of 1 night per week.

    How do banks treat this? Do they pro-rata the expenses given I only have them 14% of the time? Then that leads into the next question is how do they deal with child support? Am I able to include this amount in my cost of living estimate or is this counted as an additional expense?

    I realise different lenders will likely have different rules however any general help here would be appreciated.

    Thanks in advance! :)
     
  2. Terry_w

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

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    Are they dependant on you?
     
  3. ooneil

    ooneil Member

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    For the time they are in my care the answer would be yes.
     
  4. Terry_w

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

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    in that case I think you will need to declare them as dependants. There is no apportionment ability in any of the serviceability calcs, but you could try to argue your case - but I don't like the chances. If it was close to getting you over the line they may accept it though.
     
  5. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    It might be possible to get some sort of apportionment if a copy of your parenting agreement is available. Some lenders might accept lower living expenses on that basis if you can accompany it with a detailed budget breakdown. It would also help if that budget was backed up by actual behavior on an account statement.

    Realistically though, I don't think there's much chance of getting this type of exception.
     
    Last edited: 8th Dec, 2016
  6. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    You're going to need to get your broker to do some calling around on this - and get something in writing from someone in credit.

    Cheers

    Jamie
     
  7. Redom

    Redom Mortgage Broker Business Plus Member

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    Interesting one, it may be possible as i've never investigated it, but i doubt banks would apportion, particularly right now. They're generally very strict on minimum living expenses and don't budge on it.
     
  8. miximitosis

    miximitosis Well-Known Member

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    I've have argued it before but we had confirmed evidence via family allowance payments from Centrelink showing 50/50 custody.
     
  9. ooneil

    ooneil Member

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    Thanks everyone for answers. I had thought this may have been a more common occurrence. I guess a lot of people in my situation would just put down no dependents on an application.

    Thankfully im not relying on that to service for this purchase but i was thinking ahead to the effect that might have on any future purchase.
     
  10. Terry_w

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

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    Well you need to think ahead too. Because if you say you have 2 dependants now, but in a few years you say you have no dependants questions may be asked - if you are using the same lender or same mortgage insurer.
     
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  11. tobe

    tobe Well-Known Member

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    I got common sense from liberty and pepper for a similar scenario, 50/50 for two kids means living expenses of one.

    Both lenders can use Centrelink and child support income which is also important with this type of borrower.
     
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  12. Corey Batt

    Corey Batt Well-Known Member

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    Ditto - I've done the exact same thing with Liberty without issue, an obvious area where these types of lenders shine.
     
  13. Brady

    Brady Well-Known Member

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    Do you pay child support for the children?
     
  14. ooneil

    ooneil Member

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    Yes i do.
     
  15. Brady

    Brady Well-Known Member

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    No problem - CBA will accept not taking the children into account as dependants if you declare the child support payment amount (which you would normally) and include any of the costs (14% extra etc) in your declared monthly living expense.
     
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  16. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    I'm pretty sure most lenders would then just load the child support payments as an ongoing commitment and leave the kids off as dependents.

    Cheers

    Jamie
     
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  17. ooneil

    ooneil Member

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    Thanks for the answers everyone. I appreciate you all sharing your knowledge. :)