In particular we focus on getting the loan structure right the first time, choosing which lenders to use in the right order (yes this is important) and finally getting our clients the best deal possible.
HEM (household expenditure measure)
Each lender has their own ‘benchmark’ of what they will consider ‘living expenses’ to be, based on your income. This is known as HEM (Household Expenditure Measure). It is important for borrowers to provide accurate and comprehensive information about their living expenses as it can lead to problems down the track and may affect the lender’s decision.
They are normally broken down into 2 categories:
Essential/regular expenses: groceries, entertainment, utilities, general insurance, transport, telephone, education/childcare etc
Additional/Non-essential expenses: private health insurance, other extra insurance (ie. Life etc), private school fees, strata fees etc
Determining monthly living expenses is a crucial aspect of the home loan application as they help determine the borrower’s ability to afford the mortgage repayments along with their other financial obligations.
Banks assess a borrower's income, other loans and living expenses to calculate how much money can be put towards home loan repayments.
Learn MoreMost banks in Australia are reliant on HEM as a guide. By assessing your ability to borrow at higher interest rates, they can determine if you are still in a comfortable financial position even if interest rates rise.
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