He brings joy to billions of children (and misguided adults) around the world but could Santa Claus actually be knocked back for a home loan in Australia?
The answer may surprise you!
How Does St Nick Make Money Anyway? (Proving Your Income)
Banks can be really tough when it comes to deciding whether someone can afford a mortgage and they wouldn’t go easy on St Nick just because he’s a top bloke.
On paper, Santa is clearly self employed and banks just love to make it difficult for people who run their own businesses. It would be enough to make Santa exclaim something decidedly not Christmas-y ere he drove out of sight!
Lenders typically want to see your last two years’ personal tax returns with Notices of Assessment. Of course, this is assuming Santa earns an income at all! You can’t qualify for a home loan if you don’t have a source of regular income adequate enough to ‘service’ or meet your mortgage repayments.
We don’t know where the money for all those toys come from but, for the sake of argument, let’s assume that the jolly old fella is getting a kickback from all those parents of children he brings toys. He would need to have an Australian Business Number (ABN) and declare this income come tax time.
As self-employed borrowers know, it can be difficult to stay on top of your tax returns when you’re running a business, even if you leave home only one day a year and most days you’re just supervising elves.
Santa could assign this work to a couple of his staff members, but apart from keeping track of who’s naughty or nice, elves are notoriously poor accountants. So instead of tax returns, Santa could provide a combination of the following and qualify for a low doc home loan instead:
- 6 months of Business Activity Statements
- 6 months of Business Bank Statements
- A letter from his accountant to confirm his income is correct (postage from the North Pole might be costly but it’s worth it to get the right deal on a home loan; he could also just make a Zoom call; after all, it is 2022)
- Interim financial statements
Santa’s Workshop – Since 0000 A.D. (Home Loans For The Self-employed)
If you are self-employed – or elf-employed, as the case may be – lenders usually require you to have been running your business for at least two years before you can apply for a home loan (although there are exceptions to this with some lenders).
Santa, as an immortal being, has already been at his job for at least a couple thousand years and all signs indicate that he’ll continue indefinitely in the same line of work. Banks will absolutely love him for this.
Jolly OLD St Nick (Home Loans For Mature-Age People)
Let’s be honest: Santa is ridiculously old and he’s not doing his health any favours by eating all those offerings of cookies and milk every Christmas.
As a general rule, there are three important things you need if you’re over 50 and you’re after a home loan:
- A defined exit strategy
- The ability to demonstrate that you can make loan repayments after retirement or repay the loan before your retirement
- A lender that understands and accepts mature-age borrowers
If Santa had plans for retirement, he may have to hold off until he repays the mortgage – or demonstrate that he will still have a way to make mortgage repayments even after he has passed the red suit and magic sack of toys on to someone else.
The North Pole Real-Estate Market (Postcode Restrictions)
Many borrowers use the equity in their existing property to buy another property.
Santa owns his own home but the problem is that it likely won’t be accepted as security for a mortgage.
The reason is that banks have postcode restrictions meaning some property locations – like the North Pole – would not be accepted. The North Pole, with its brutal terrain (Polar bears!), remote location and lack of sunlight for much of the year, has precious few people looking to live there; even Santa’s reindeer wouldn’t mind sliding a few degrees south. And that’s before we even talk about the house, factory and stables themselves, which would be quite old and may not even have North Pole Council approval at this point. And even if, through some Christmas miracle, a broker found a lender that would consider the property, it would take a lot more than a few stocking stuffers to convince any valuer to rug up and head all the way up north to value the place.
With all these ‘features’, most lenders would not accept the property as a security because it would be hard to sell if Father Christmas couldn’t pay his mortgage.
Fortunately for you, the property you own or want to buy is (probably) not at the North Pole. But if you’re still unsure about whether a bank will accept it as security, check out the check out the property types page for other locations and property types that may not be accepted for a home loan. With some lenders, you may still get approval!
The World Loves Santa (Foreign Borrowers)
It’s fair to say that Santa is a citizen of the world. He is welcomed by all and clearly takes advantage of that, as he is happy to let himself into your home while you are sleeping.
Creepiness aside, the fact is that Santa isn’t a citizen of any one country either, including Australia.
As a foreigner, he can still qualify for a mortgage but foreign citizens living outside of Australian are limited to borrowing up to 80% of the property value.
The borrowing limit is the same if he decides to make his home down under.
Is There A Way He Can Borrow More Than 80%?
Yes! If Santa married an Australian citizen he could borrow up to 90% or even 95% of the property value!
Not sure it would be worth having to explain that to Mrs. Claus, though!
The Spirit of Too Much Giving? (Watch Your Expenses)
If Santa is getting paid by billions of parents around the world, it makes you wonder why he needs a home loan in the first place.
Then again, his labour costs must be astronomically high, with all those elves putting in shifts around the clock at crunch time, and food, shelter and upkeep for reindeer isn’t cheap either (the seeds for those magic corn kernels alone must cost a fortune). He might need to review his expenses. But before doing that, Santa could simplify his financial management with our 360° Home Loan Assessor.
As with a mortgage application for you and me, banks will look at Santa’s ingoings and outgoings carefully. If his expenses are high, compared with his income, then banks may question whether he can afford a home loan.
Of course, as a business owner, Santa may claim expenses – such as the cost of upkeep for his magical sleigh or elves’ uniforms – as deductions to reduce his taxable inc…Wait a minute! If Santa is a citizen of the world but not of any one country, does he pay taxes everywhere or nowhere? If it’s the former, it might explain why he needs a loan.
Anyway, perplexing questions like this aside, there are lenders who can add back these expenses to Santa’s assessable income so he can potentially borrow at a higher Loan-to Value-Ratio (LVR).
How Does Your Situation Compare With Santa’s? (Can You Get Approval?)
If you’re in a situation that’s a little outside-of-the-box, such as being self employed with little to no income evidence, over 50 or a non-resident, it can be really tough to get a home loan.
However, a specialist mortgage broker who has a thorough understanding of credit policies from a number of Australian lenders can always improve your chances of getting approval.
That’s because they understand getting approved comes down to building a good case with the right lender.
Call us on 1300 889 743 or complete our free assessment form to speak with one of our experienced mortgage brokers.
We can help you own your own home in 2023! Have a Merry Christmas!