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Salary Sacrifice Impact on Borrowing Capacity

Discussion in 'Property Finance' started by 2FAST4U, 3rd Oct, 2015.

  1. 2FAST4U

    2FAST4U Well-Known Member

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    My workplace has the option of salary sacrificing. I've looked at the numbers and obviously I would be saving myself income tax by taking this option. Before I sign up to it though I was just wondering whether it would have a positive or negative impact on my borrowing capacity?

    Cheers.
     
  2. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    Salary sacrificing is fine since "it can be stopped at anytime". Ensure that the broker or banker covers this proactively in their submission notes rather than credit raising this as if they do this they will then start requesting unnecessary documentation.
     
  3. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Not a problem so long as you're not salary sacrificing for an ongoing commitment such as a novated lease.
     
  4. D.T.

    D.T. Adelaide Property Manager Business Member

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    What were you thinking of sacrificing? Just Super?
     
  5. Scott No Mates

    Scott No Mates Well-Known Member

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    The wife & kids
     
    Last edited: 3rd Oct, 2015
  6. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Sal sac for living costs. mortgages, and meal cards etc can boost servicing by quite a bit .

    More so if you are in the 38 c or more in the $ tax bracket because you can pick up near 17 k benefit "post tax" vs 10.5 post tax.

    As already mentioned, most peops get into arrangements that arent actually "good" for them .
    financially.

    A good eg is someone that would have bought a 3 year olf Corolla taking on a Volvo S 40 lease on the basis it saves on "tax" and get to drive a nice car for the same bottom line cost.............

    ta
    rolf
     
  7. SouthBoy

    SouthBoy Well-Known Member

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    If I salary sacrifice an additional 10% of my pre-tax salary into Super, say for OCT, NOV 2015, my payslips shows a reduced annual income on the top part of the slip. So when I give payslips for OCT, NOV 2015, banks always come back and query has my salary dropped. For this reason I do NOT salary sacrifice in the months where I may need to submit payslips to bank/broker.
     
  8. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    They will query it, but it is a simple answer to them and they should then take the income without salary sac.
     
  9. SouthBoy

    SouthBoy Well-Known Member

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    Thanks! That's good to know
     
  10. Perthguy

    Perthguy Well-Known Member

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    I do salary sacrifice but I let my broker know that if I cancel the salary sacrifice it will be cancelled immediately. He has passed the information on to the bank and it has not been an issue.
     
  11. SouthBoy

    SouthBoy Well-Known Member

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    thanks, it was not clearly communicated to me earlier by my broker. But I have stopped salary sacrificing since early this year, I figured I'm better off putting all surplus $$$ into my PPOR.
     
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  12. Perthguy

    Perthguy Well-Known Member

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    Oh, yes. I don't have any non-deductible debt, which is why I salary sacrifice.
     
  13. Richard Taylor

    Richard Taylor Mortgage Broker & Brisbane Buyers Agent

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    Should have been the other way round.

    Your Broker should be looking at your payslips and asking you the question on the deductions rather than letting it going to credit and them raising the question as to whether it is an ongoing commitment.

    Cheers


    Richard
     
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  14. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    If the sal sac can be stopped at any time (ie. it's voluntary super contributions, etc) then all good - it won't effect borrowing capacity.

    If you've salary sacrificed the latest VW golf....that will hinder your capacity.

    Cheers

    Jamie
     
  15. 2FAST4U

    2FAST4U Well-Known Member

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    Thanks for all the replies. The purpose is just for daily living expenses- food, petrol etc.
     
  16. Tim86

    Tim86 Well-Known Member

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    I salary sacrifice $16 000 a year toward my mortgage because I work for a not for profit. It means my net income is the equivalent of someone else earning $10k gross more.

    I'm pretty sure it helps with servicing rather than hinders.

    Don't know why it would hinder servicing considering it means you have more money.
     
  17. Beelzebub

    Beelzebub Well-Known Member

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    If it helps my other half also salary sacrifices. Basically it seems to me like a money go round. Work deducts x amount from her wage and the salary sacrificing company (Maxia) pays x amount (which is more than the amount deducted from her wage) back into her account.

    We nominated with Maxiaa that the salary sacrificing amount was to be paid off some non-deductible debt. But they don't pay that amount every fortnight directly onto the debt, they pay it into my other half's bank account.

    When we applied for our IP we just had to show the Maxiaa slip.

    So yeh, surely that would be better for serviceability as net income is higher?
     
  18. euro73

    euro73 Well-Known Member Business Member

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    [QUOTE="Jamie Moore, post: 75265, member: 14" If you've salary sacrificed the latest VW golf....that will hinder your capacity.

    In more ways than one.... :)
     
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  19. tobe

    tobe Well-Known Member

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    Salary sacrifice when working for a charity or registered nonprofit is marginally better than ordinary taxation, if you can prove it to the assessor. Unfortunately it can depend on which assessor you get, few lenders have policies in this regard. The income is still taxed, it's fringe benefits tax paid by the employer.
     
  20. Jeah_

    Jeah_ Well-Known Member

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    Correct me if I'm wrong, but you can only do this if you work in the health industry or for a non-profit organisation?