The Clients:
Jackson and Pippa, two young Australians, have saved $40,000 to buy their first home in Brisbane, QLD, with a purchase price of $700,000. Jackson, an electrician, started his own company 17 months ago and has seen his income increase significantly in the last 12 months. Pippa, a flight attendant with JetStar, has been with them for 14 months and works overtime and weekends. They have applied to two banks for loan approval and a credit union, but all have declined. They are also being advised to check first home owner’s grants and schemes.
The Problem:
Jackson’s ABN has only been registered for 17 months. Most banks require minimum 24 months. Averaging Jackon’s income over 2 years lowers the income significantly. Most of Pippa’s wages are overtime which cannot be used because she hasn’t been employed long enough (2 years).
Solution:
First home buyers often face challenges when dealing with unknowing bank branches. While most banks require minimum 24 months, there are 3 banks that will be OK with 18 months ABN registration. And even 2 of these both allow an applicant to use the most recent years income in isolation (ANZ and Bankwest). Provided Pippa’s income can be supported with a PAYG summary and a letter from her employer confirming that overtime is a fundamental part of her job, many lenders will take this as core hours and hence 100% of salary. In AMC we are fully across all First Homeowner’s benefits grants, Low deposit schemes etc. Due to the purchase price being below $800,000, a First Homeowners grant of $30,000 was applied, allowing them to borrow up to 95% of the property value without paying Lender Mortgage Insurance (LMI) under the First Home Loan Deposit Scheme (FHLDS). Yet another couple get on the property ladder in Australia. Well done guys!
