Join Australia's most dynamic and respected property investment community

Will invest lose impact sevicibility?

Discussion in 'Property Finance' started by flosed, 13th May, 2016.

  1. flosed

    flosed Member

    Joined:
    19th Feb, 2016
    Posts:
    8
    Location:
    Sydney
    If I got 200k annual income with 50k negative gearing lose , 50k stock interst lose(deductible margin loan interest for ex.) .

    Willl bank treat my annual income 100k?
    Thanks in advance.
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,972
    Location:
    Sydney
    no

    Your income is $200k. They work on gross income.
    But if you have a margin loan this will be a debt that must be taken into account
     
  3. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,764
    Location:
    Perth WA
  4. Hodor

    Hodor Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    738
    Location:
    Homeless
    You may be negatively geared by 50k on property and 50k on stock. Banks don't (usually) assess at actual rates, you need to prove serviceability at the assessment rate which from memory is around 7.5%. Hence things get tougher the more debt you have generally.
     
  5. Redom

    Redom Mortgage Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    857
    Location:
    Sydney (West) and Canberra
    They'll use your gross income (salary, rental, etc). They may apply some level of income shading depending on the nature of the income, e.g (some general numbers):
    Bonus - 80%
    Overtime/Commissions - 80%
    Rental - 80%.
    Investment income - 80% (evidence of this varies between banks).

    Then they'll work out your 'assessed' expenses. This will include your loans, and with MOST funders, your margin loan (except CBA). The treatment banks use will differ bank to bank, but most will apply a large sensitised interest rate (near double) your actual repayment that you pay to the bank.

    How much you negative gear on your investments doesn't directly come into it - but it will do so indirectly in the calculation methods mentioned above (e.g. negative gearing portfolios typically have high interest costs, this leads to higher assessed expenses, etc).