Fully considering all your income sources can maximize your borrowing capacity and enable you to buy your first home or investment property or even upgrade to a larger dwelling. Though banks and other lenders assess your supplementary income streams differently from your base salary, having an experienced mortgage broker can help you identify and appraise all your income sources.
One viable income source is your bonus income, especially if you receive a regular bonus at work. Most lenders consider this if it is paid on a quarterly or monthly basis. Annual bonuses are still subject to their policies. Another income source is commissions. You need to be able to show consistent commissions over two of your most recent tax returns.
Allowances like car, shift, and penalty allowances are assessed differently by each lender. Some may put a cap on your allowance, but what is important is to ensure that they are correctly documented in your application.
If you already own investment property, you may include your rental income in your application. Most lenders use 80 per cent of the rent when calculating your borrowing power, and some banks consider negative gearing. However, those who have a rental income from holiday homes are not considered as dependable as regular investment property, so it depends on the location of the dwelling and your declared income tax returns for two previous years.
You may also include share dividends in your application, especially if you have a healthy share portfolio in the Australian or international equities markets. Pensions are assessed on a case-to-case basis. Lenders also include the Family Tax Benefit and child support payments as income streams.
It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan