Should You Ask for a Pay Rise OR Employment Benefits
Boost Your Home Loan Borrowing Capacity: Pay Rise vs. Employment Benefits
When pursuing homeownership in Australia, understanding how your income impacts your borrowing capacity is crucial. A common question is whether negotiating a pay rise or securing additional employment benefits will enhance your ability to secure a home loan. Both options have their merits, but they affect your borrowing capacity in different ways.
The Impact of a Pay Rise on Your Borrowing Capacity
Securing a pay rise can significantly boost your home loan prospects. By increasing your base salary, you enhance your financial stability, which lenders view as a strong indicator of your ability to meet mortgage repayments reliably. A higher salary translates to a larger borrowing capacity, allowing you to access a more substantial loan amount and potentially secure the home you’ve always dreamed of.
Employment Benefits: How They Affect Your Loan Application
While additional employment benefits like travel or meal allowances can improve your overall compensation package, they may not have the same positive impact on your borrowing capacity. These benefits are often considered discretionary income and may not be viewed as stable or consistent by lenders.
Lenders may include some allowances in their assessment of your borrowing power, but often, they focus more on your base salary. Variable or temporary benefits, such as overtime or shift allowances, might not be factored into your borrowing capacity, which can limit their effectiveness in enhancing your home loan application.
Prioritising Stable Income for Mortgage Success
For a smoother loan approval process and to maximise your home loan potential, prioritise stable and consistent income sources like your base salary. This approach minimizes complications and increases your chances of securing the mortgage you need.
Connect with HER Finance for Expert Guidance
If you’re navigating the mortgage process and need personalized advice, HER Finance is here to help. Book a planning session with Isabella to explore how your income and benefits can impact your home loan application. Visit www.herfinance.com.au or email hello@herfinance.com.au for more information. Follow us on social media at @herfinancebrokers for the latest financial insights and updates.