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HashChing is Australia’s first online marketplace allowing consumers to access great home loan deals without having to shop around. Completely FREE to consumers, HashChing connects you directly to verified mortgage brokers who can further negotiate a better rate from the lenders and save you time, hassle and money.

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Brian

3 years ago

Hi KenYes they do have a set limit used for living expenses that differs based on the bank. Typically it is based off the HEM poverty index plus a loading percentage.

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Brian

3 years ago

Hi Ken,Yes, different lenders have different assessment rates. They will also assess any other debt higher. Credit cards are often a sticky one for clients who have really high limits and nothing outstanding. Most banks will assess these as fully drawn even with a zero balance.If you are a single person with no dependants their living expenses will be different to that of a customer who is married with 3 kids. Your level of income also can be a determining factor.Hope this helps :)

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kelvin

3 years ago

The reason you should see a broker is so that your current and new needs can be properly evaluated. Some lenders do all loans at the reference rate (around 7.4%) while other do at no uplift, 20%, 30%. But that is only part of the story and they have different living expense calculations. See a broker to go through your lending needs.

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Steven

3 years ago

Yes lenders have a set amount but like the "buffer" it varies from lender to lender.

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Nolan

3 years ago

Lenders do have a set amount that they take as a minimum, but the way the industry is going it is best to have a sit down and look what your monthly expenses are to the best of your ability. This will stand you in good stead to know what you can realistically afford.

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Peiran

3 years ago

Depends on the lender, some lender like Commbank has a certain number for the living expenses while others like ANZ, NAB have the living expenses adjust with the income, normally higher income, higher expenses will be considered.

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Chris

3 years ago

HI Ken, All lenders have a standard ratio ranging from 7% to 8% (depends on the lender) serviceability is generally worked on principle and interest payments over a 30 year period for residential properties, Commercial ones vary form 15 up to 30 years depending on the lender. There are certain factors that will change that, 1) interest only loans, are worked out on the remaining time frame. i.e. 5year interest only loan, means that the servicing will be done over 25 years. 2) age of the borrower and purpose, most lender will be reluctant to do a 30 year loan for someone in their sixties looking to buy their 1st home... If you would like to discuss this in more detail feel free to give me a call. Regards Chris

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Matt

3 years ago

Hi Ken, yes they do. It does vary though from lender to lender. What we do as part of our preliminary assessment is enter all of your financial details in our system, including all liabilities and expenses. This is then run through all of our lenders serviceability calculators showing us how much each lender will lend.

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Ken

3 years ago

Thank you all. Do they generally have a set amount they use in terms of living expense, say for a single with no dependants, to apply to the calculation?

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Peiran

3 years ago

Hi Ken, servicing is important and yes the lenders will have a floor rate when calculating your capacity of a loan arrangement. they will also consider your existing commitment as well as your living expenses when considering how much you can borrow.BTW how is your refinance going?

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Matt

3 years ago

Hi Ken. Yes they do have a buffer and it varies from Lender to Lender. 7.25% is a common rate that lenders will use to determine serviceability. Other factors they will consider are minimum living expenses depending on the size of your family. There are no principal only loans just interest only (which I'm pretty sure you meant), If you went with an interest only loan then it will actually make serviceability harder - i.e. if you went for a 30 year loan with 2 years interest only, the loan repayments will be calculated at the principal and interest amount over 28 years (30yrs - 2yrs I/O). The reason for this is once the 2yrs are over, to pay the loan off in the 30yrs you will need to pay a higher amount. You can have longer interest only periods depending on the lender, and it may be possible to refinance at the end of the interest only period to stay interest only if need be. Hope this makes sense - regards, Matt - Optimum Home Loans and Finance.

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Steven

3 years ago

Hi Ken yes lenders do have a "buffer" and each lender has a different rate. The factors they take into account are your income and any liabilities you have, eg. credit cards/ store cards personal loans etc.Also the serviceability will be Principal and Interest but can be worked out as Interest only if requested. Please email me with any further questions.

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Manish

3 years ago

Hi Ken, you are right, every lender put a buffer which we call assessment rate. serviceability of loan is calculated on factors mainly on number of dependants and total liabilites. Serviceability is different from Interest rates. Interest rates are dependant on other factors. Please feel free to call me on 04****99 if you have any other questions. Thanks Manish

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Nolan

3 years ago

Hi Ken, again depends on the lender , butt yes there is a buffer built in for the inevitable rate increases that would occur over the 30 year life of the loan. I have seen some mid sevens in some serviceability calculators. They calculate the loan on P&I. Please feel free to ask me any questions , Nolan Parodi

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