Can I still use my LAFHA income?

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EdwinaW
Posts: 71
Joined: Tue Nov 15, 2011 9:26 am

Can I still use my LAFHA income?

Post by EdwinaW »

Hey everyone,

As some of you might know there will be changes to LAFHA. The LAFHA changes will only impact the non-residents in most cases. I'm on a 457 visa and I have been receiving LAFHA benefits. A majority of my income in Australia has been tax free for a couple of years and I was earning more in net because of this.

I'm looking to buy some investment properties soon and I want to use my net income to borrow. However, I have to disclose that in July my net income will be reduced by 30% because of the LAFHA changes.

This will severely impact my ability to borrow. How are the banks dealing with this and how will they view my LAFHA?

Regards,

Edwina

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otea
Posts: 65
Joined: Wed Mar 31, 2010 10:35 am

Re: Can I still use my LAFHA income?

Post by otea »

Hello Edwina,

I understand your situation very well. The LAFHA changes to be made has placed me in a predicament, where I don't even know if I'll have to move the family back to UK. I don't know if there are many overseas workers out there reading this but I, along with many other non-residents have been actively involved in voicing our discontent with the decisions made by the Australian Government to restrict LAFHA benefits to Australian residents only.

LAFHA was one of the reasons I came to Australia to work in the first place. With the untaxed income I was receiving I could make a better life for myself and my family.

Now the government is cutting LAFHA in Australia for all non Australian citizen/ non permanent residents and I'm left wondering where this will leave me. I have a mortgage and my capacity will become significantly lower.

We all know that Sydney is one of the most expensive cities in the world and unfortunately, my work is located in Sydney. I was doing well with the LAFHA benefits but I face losing 33% of my income when the LAFHA is taken away.

I will be paying the full taxes even though I'm not an Australian PR or a citizen! The citizens receive social benefits and free public schooling, and health care. I'm not eligible for those benefits and I have 3 children! It's beyond me how I will be making ends meet with a diminishing income.

Sorry to have gotten off the track here. However, I would highly recommend that you disclose to the lenders that your income will not be tax-free soon.

I borrowed for a home loan with my higher salary and I may now struggle to make the repayments and may have to look into selling the home and moving back to UK.

Regards,

AgnerWagner
Posts: 1
Joined: Mon Apr 16, 2012 3:31 pm

Can I still use my LAFHA income

Post by AgnerWagner »

Hi.

If I make 10k a month. how much can I loan from the bank?
Im looking to loan for 30 years and maximize my loan ability.
Is there a way to calculate how much I can loan based on my income
and how long I wish to borrow? I need to know this so I can budget what kind of property I can afford to look at.

Thanks.

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Otto Dargan
Mortgage Specialist
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Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: Can I still use my LAFHA income?

Post by Otto Dargan »

Hi Agner

Calculating your borrowing capacity is quite complex. Your income isn't enough to figure it out, we would need to know your living expenses, your current debts and your intentions with the property.

Also with LAFHA ending for many temporary residents, your after tax income has likely changed so you will need to take this into account as well.

You can use our how much can I borrow calculator to find out how the banks will view your situation.
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

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