Net Disposable Income and Lenders Ratios: The Basics
Net disposable income is the amount an individual has leftover from their monthly salary after paying off their obligations. It’s one method lenders use to gauge a borrower’s ability to repay their home loan.
In 2018, the Australian average net disposable income stood at $1,157. The average weekly income stood at $2,418. Some regions of Australia see higher income and disposable income. Lenders take these factors into account too.
When disposable income is high compared to the individual’s monthly salary, it bodes well for their financial situation.
Mortgage House uses a system to rate mortgage applicants by their net disposable income. A rating of 1 means that the borrower qualifies as a prime applicant. The 1.1 rating qualifies the borrower for a prime loan doc. A rating of 1.2 places the individual in bad credit territory.
The lowest amount that lenders issue for home loans is $100,000. An individual can begin their journey toward homeownership and building wealth with a minimum mortgage amount. Their job is to place collateral against the home loan. It also helps to bring a guarantor.
Our proprietary tools help our loan specialists find suitable mortgages for most applicants. In addition, Mortgage House offers several online tools that remain free and have no strings attached including the car loan calculator.
Net Disposable Income Conclusion
The higher a person’s net disposable income, the better their financial situation. A high-income bracket helps. However, many individuals incur more expenses because they have more income. To discuss your home loan options, contact our team of loan specialists at Mortgage House.