Mortgage Experts Blog
What do I do if my income is outside base or usual income?
Following the latest APRA requirements, many banks have introduced policy changes to their net surplus calculators. These changes see a tightening on what types of income is accepted when applying for a loan. With certain banks, different incomes such as commission, overtime, shift penalties and bonuses are only accepted 50% as a common practice or not at all. However particular lenders still accept up to 100% of this unusual income. Policies can be quite strict but working with an expert that knows them inside out can insure that you get the best set-up for your specific situation and income type.
For certain industries, commission can make up a large proportion of total income. For these individuals, a lot of time can be wasted applying with lenders who don’t accept this as income or accept a low percentage. Due to the fluctuating nature of this income banks are increasingly cautious. However, there are banks that accept 100% but on certain conditions. Some banks while stating they take 100% commission limit to no more than double base income which won’t suite certain commission based professions. Employment stability plays a large role in this decision. Lenders take into account; the length of time in current job, time in industry, volatility of industry, and consistency of your income. In addition, there are some more complex factors that are lender specific.
These essential services are:
- Healthcare (in particular, if you are a nurse, overtime income is readily accepted)
- Police, Fire and Rescue
- Emergency Services
Shift penalties or allowances
Every lender has a different policy when accepting shift allowances or penalties. For it to be deemed as assessable income, lenders need to confirm the penalty pay has been regular and will continue to be. For example, one lender on our panel accepts 100% of shift penalties or allowance if the borrower has had 6 months in a current job, or 12 months in the same field/ line of work.
- - For monthly or quarterly bonuses lenders can accept 80% to 100% of the bonus income. They must be paid regularly and a letter from your employer can be provided with the application. With a minimum three months history you can borrow up to 90% LVR
- - Annual bonuses are a little bit tighter in regulation, a few of our lenders accept up to 100%. However you must be able to provide payslips detailing the bonus amounts received over the past 2 financial years to prove this income is ongoing