So, she first checked whether I could service the loan based on the data I submitted. Based on just my salary of AUD 176k per year and our spending and a AUD 500k loan the answer was no. Given my salary is supposedly in the top 5% or higher, our house value is only a bit above the median price for houses here, and lots of people drive luxury cars etc. and we don't, you'd think this wouldn't be a problem. She said our spending was "very high". Either government income data is too low (but the banks ask for tax returns), or people somehow hide spending from the banks (but the banks ask for bank statements), or what? It's hard to reconcile what I see with the data.
Our net worth is in the top 300,000 or so of households and my income in the top 400,000 of taxpayers according to this official data.
By the way, five plus years ago, when we were looking to buy a house, the banks were willing to lend us much more money. Lending standards really have tightened.
4 comments:
Hi Moom
I have also gone into the strange world of bank/broker financing recently. Similar to yourself, I have assets and recently on above average income (but now retired). The response from many banks for a loan of 25% of a future home was perplexingly refused. I had to reduce the amount we spend on travel to make their criteria. It seems that many others are playing the game on their expenses submissions.
First time commenter but have tuned into your great blog for many years.
Thanks for commenting. I added your blog to the list.
Maybe people who have nice cars, spend hardly anything on anything else? We have an occassional surprise when our kids going for playdate to friends, who has a better life at glance (more expensive houses, cars..).
I do not see how three time your income the answer is "no". It could be that their expect deflation in the housing market.
Slack Investor,
You are still very lucky. In the UK if you are retired, you can not get a mortgage all together. The banks only give them to the working people and only up to the retirement age. This particularly hard on people who divorced once and trying to start again in their 40s...
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