Will any banks consider renting a room as income for FHB?

I spoke with NAB and they said they wouldn’t consider renting a room as income for my daughter’s FHB purchase as it would be her principal home. Will all banks be the same?

 

For a purchase - lenders won't include it. For future borrowing capacity assessments, it may be able to be used if it can be evidenced sufficiently (e.g. tax returns).

 

Not for the purchase @Propin ...

Cheers,

 

All banks are likely to take the same line.

 

Wow, thanks for the responses. Now I understand why people rentvest! It’s so hard to buy on one income unless you want a 1 bed unit. Rentvest would possibly stack up better.

 

Perth benefits aren’t that great anyway!

 

Could a FHB buy with the intention to rent it out for 12 months and use the extra serviceability that way?

 

I asked the same thing when the monther inlaw moved in. And she's on the pension and there is no way she could afford to buy or rent privately so she will stay with us for long Time lol

Even tho we declare it as income at tax time bank still says no.
She pays 150 a week whick pays for the gas water and electricity for the whole house but the bank still would deducted that from our living expenses either so we went over lol

 

Yes but as an investment property which means they wouldn’t get the FHB.
You also neee to be mindful of their current living arranagements. Whilst you can add in the estimated rental return into servicing if your renting then that needs to be declared.
So unless your living with parents or sharing rental you may find it does little to increase servicing.

 

That doesn't help either these days. Even living rent free, most lenders include a minimum monthly figure (at least $500) to cover rent. Their logic is that if the parents change something, you're going to have to rent anyway.

 

Not only FHB - in QLD that would count as disposal - you would not be eligible for the home transfer duty concession. I have seen it clawed back with penalty interest when someone tried to fight it.

 

I'm pretty sure in most or even all states you can get FHB in some form if you move in within 12 months of settlement - and so it can be rented before that.

 

In QLD you can't rent out, previous owner can and as long as lease expires within 6 months of settlement.

 

Just me. I would want to be able to cover PI payments on my own. Renting a room out to a compatible person is a bit hit and miss. If I could find someone I would think of the money as extra repayments to take 10 years or so off loan/build equity.

 

Not just you - also the banks. Make sense not to rely on a 3rd party renting out a room to show affordability for a loan.

 

Yes but $500 living with mum and dad per week or in a shared living arrangement is going to do a lot more for servicing that a standard rental where you might be paying more like $300+ per week.

Yes I get that but two issues here:
1 - You cannot utilize any of the FHB benefits into your funds to complete. So instead of the banks calculating stamps on $0, they will be wanting to see where your 20-30k is coming from. I imagine for most FHB this right there kills the deal.
2 - You would likely get away with it but your basically committing fraud to either
A) The bank lying on your application to increase servicing.
B) To the SRO because you don’t actually live there and your claiming FHB.

Yes technically you could purchase an investment and move into it legally within 12 months but it meant you had all intentions of doing so but as it just turned out you could never get a tenant OR your tenant moved out within 12 months and it just turns out you were in a position to move in

 

This is the type of thing that lenders will begin pushing the boundaries on again soon enough, indeed some already have (living rent free expenditures in servicing). Living rent free generally does aid servicing, its hard to rent for the amount they take notionally! Also its one of the factors thats different lender to lender. In the current servicing climate, lender calculators are quite uniform - so this is a relatively large difference in calculations from one lender to next (~$650 per month in expenses differential makes a big difference to servicing calc).