Those that remember reading my story about Suncorp and their discrimination policy on those within 30 years of reaching 65 years old, I have a new story of abominable proportion. In brief for those that didn't read the Suncorp story – I am 43 and the assumption is I will retire at 65 so therefore can only get a loan for 22 years. Significantly reduced the loan amount. Nice.
RAMS having taken two weeks to deliberate my standing and despite continually asking for information that they already had given to them several times took it to the 11th hour to tell me that my application was declined because I salary sacrifice a vehicle. Now, to put you in the picture here is my situation. No debt, no credit, $40,000 in the bank, regular savings that equate to a $375,000 property at 6.3%, far more than is need for the $308,000 loan I asked for. And RAMS say sorry you salary sacrifice. No serviceability. Like Suncorp, they took the entire salary sacrifice and added it to the LSR.
So, my advice to anyone thinking of salary sacrificing a vehicle and wanting to buy a property. Don't salary sacrifice until you have secured the loan for the property.
WTF – if you salary sacrifice the car (or pay addit to super etc) this comes out of pre-tax salary. You would generally have a car regardless of whether it was owned, HP, personal loan etc, so why do some banks crucify you for having finance transport? Sure your taxable gross is reduced but they should still be looking at your package.
In my dealings with finance, if you salary sacrafice anything, it comes off your salary and the banks take that net amount for your servicability. An alternative that I've seen is them adding it back in and treating it like a normal car loan – the reasons behind this is that if you either decide not to salary sacrafice or can't in the future, you'll still have those payments to be made. Could it be possible that if they took this approach that you would have falled short on servicability?
I was told by the broker that they took the entire entire salary sacrifice amount and treated it as a debt. Bang, DSR through the roof.
Since my last post I have been dealing with a new broker who came highly recommended by two friends (a little too late). His opinion is that the assessor may have been inexperienced. He contacted several lenders for me and they all seem to be of the opinion that I won't have a problem servicing the loan with the Salary sacrifice. I guess I will see.
Funny, i had a client who salary sacrificed his whole income, so he had $nil taxable income and the bank still was able to lend to him. Westpac it was. (he was putting all his money into super)
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
I am assuming that the assessor at RAMS must have been having a bad day. The new broker that I am using has secured an extension on the finance clause and has been in contact verbally with 5 different lenders and they are saying no problem.
I guess time will tell.
Goodmorning all,
Just to finish my story with a happy ending – Westpac are the one's that used that rare commodity 'common sense' and granted me the loan.
The NAB will also provide me enough to pay out the residual on the vehicle. Settlement is on Wednesday. It's nice to be back in the game.
Yes must admit never had an issue in obtaining finance for clients who have salary sacrificed.
Richard Taylor | Australia's leading private lender
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