Salary includes shares

Discussion in 'Loans & Mortgage Brokers' started by Natascha, 5th Jun, 2017.

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  1. Natascha

    Natascha Active Member

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    Hi,

    how do the banks view shares as part of salary? My husband's salary package has ca 20% share component. It's a very large Fortune 500 company. Will a bank take that into account when we take up a new mortgage or will they base their serviceability calculation on cash salary?

    thx
    natascha
     
  2. tobe

    tobe Well-Known Member

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    They won't unless you get a letter saying your husband has te right to convert the shares payment to be paid wholly in cash.

    Usually these share schemes have a minimum term to hold or be vested. They are also usually contracted as a 'bonus' which banks only use 80% of. Some will only use it once he has 2 payment summaries and they take the lowest.
     
  3. Natascha

    Natascha Active Member

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    Hm no he can't convert the shares to cash from the employer side. But they are not a bonus payment. Minimum holding time is 6 months and they vest twice a year. On the pro side, the share values have tripled, which is pretty awesome.

    We are currently with CBA is that good or bad?
     
  4. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Hiya

    The only way shares (in this instance) could help with your borrowing capacity is if you can show the lender a couple of years tax returns from the dividends they pay.

    If it was voluntary contributions to purchase company shares - then that would be a different story. The bank could include that income as the borrower could stop purchasing the shares at any time.

    Cheers

    Jamie
     
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  5. tobe

    tobe Well-Known Member

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    Good or bad? It just is. The lender you are currently with has no impact on your success or not with a new loan.


    I'd get a copy of the employment contract and some payslips to a broker who can check and see if any lender would accept this sort of income. Some might, but they will likely treat it like a bonus rather than regular payg. Interest is due monthly, so waiting 6 months might be an issue for a lot of lenders. It's not so much the lenders risk but the lenders regulatory risk. They don't want to be open to being sued if this loan goes into arrears.
     
  6. Natascha

    Natascha Active Member

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    Thx. It looks like at least we won't be overextending ourselves ;)
     

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