Marriage and finances

I got married recently and wondering whether banks apply any changes to serviceability once you're married. Or if there are any tricks to boost my serviceability!! Unfortunately my wife doesn't have the capacity to service our PPOR loan so putting that in her name isn't an option...

My wife and I have been living together for 2 years (I own our PPOR), I am the main bread winner, I have a few IPs and developments going on in my personal name and trusts (I am Director of corp trustee). We recently purchased an IP in her name only and she has no more serviceability.

Moving forward I will be buying in trusts (with me as Director of corp trust) or in my personal name. Does the fact that I'm now married affect my serviceability, or is it only once you have children that it has a drag on serviceability?

I take a "what's mine is yours" approach to finances, but our savings are currently in our own (separate) individual accounts and we have our own credit cards etc. I'm guessing if we had one joint account with all savings and I increased my credit card limit so both of us could use it, that would reduce my serviceability?

Since future borrowings will be in my name or my trusts, I guess an option to increase my serviceability would be to cancel my credit card, regularly transfer cash into my wife's account and then use her credit card? Would that work?

How much does a credit card with $6k limit affect serviceability any way?

Any other tips or tricks would be appreciated!

 

You'd need to add her as an additional adult in the calculations, if she can show that she's able to support herself then they may consider excluding her.

Reducing CC limit by $6k will probably allow x 5-6 times borrowing of the limit.

 

A great one, albeit tricky to actually make happen, is to have the PPOR in partners name and loan in her name only. Opens up serviceability a lot for the investor borrower if they live in their partners home and are not a mortgagee (effectively living rent free in their home).

while great if there isn’t much income to leverage off the PPOR debt will likely be low and may trap equity.

 

Yep, unfortunately not possible on her income and she will likely stop working in the coming year/s too. Will probably pay off PPOR soon anyway, then take out loan against it so it's deductible.

 

Thanks. If I cancel my credit card then transferred her $6k per month and used her credit card, would this show as 'nil CC debt' on my loan applications?

 

No, compared to if you were a couple before
Yes, if you were not a couple before

savings account has no affect, but the increased CC limit will make servicing worse off.

Yes if you will be borrowing without her in the future, you will have less debt.

Bugger all - $50kish. But could be enough to get you over the line.

You are missing something in your thinking. Ownership doesn't need to reflect the loans. She could own the main residence yet both be on the loan initially. You could remove yourself later potentially and she could still have a loan on there which could be debt recycled and 'onlent' by her to you and this could be structured so that your servicing is improved.

Might be too late if you already own the main resi tho.

It might still count as living expenses depending on how you do this and the finer details

 

This is very open ended. In some cases being married will improve serviceability, or it may erode serviceability. It really depends on the individual circumstances. If your partner is not working then serviceability will definitely be reduced (your income is now supporting two people).

There's also a lot of differing lender policies around this. Some lenders are more generous in certain circumstances than others. There's isn't a single answer to this problem.