Can I use my scholarship income to get a mortgage?

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Pooh_Bear
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Can I use my scholarship income to get a mortgage?

Postby Pooh_Bear » Fri Aug 01, 2014 10:38 am

Hello home loan forum,

I’m currently studying in the University of Tasmania on scholarship. I’ve not been using my scholarship income excessively and so I’m thinking of using it to take out a mortgage. I’ve heard from some of my friends that I may be able to do this, won’t I?

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Otto Dargan
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Re: Can I use my scholarship income to get a mortgage?

Postby Otto Dargan » Fri Aug 01, 2014 2:06 pm

Hello Pooh_Bear, welcome to the forums.

You may be able to use your scholarship income to take out a mortgage in order to buy a property. However, most lenders may only accept the following scholarships or fellowships:
  • Commonwealth scholarship - Government scholarships are generally paid as tax free income on an ongoing basis. Some lenders may accept this income for a home loan.
  • University scholarship - University scholarships may either be paid as taxable income or paid as a tax free income on an ongoing basis. A few lenders may accept this income for a home loan.
  • Fellowship - Lenders may only accept this income on a case by case basis, depending upon the nature of the payments as well as the likelihood that it is to continue.
Generally, only the actual income that you have received may be accepted by the lenders. The lender’s assessment does not include other benefits.

The following income / benefits may not be accepted by the lenders:
  • Scholarships awarded as a prize.
  • Merit based scholarships.
  • Fee exempt scholarships.
  • Direct payment of tuition.
  • HECS exemption.
  • Free accommodation.
  • Additional allowances. However, if it is a government benefit then it may be accepted on a case by case basis.
It should be noted that some lenders may ring the provider of your scholarship in order to confirm the nature of the benefits that you receive.

Cheers,
Otto
Otto Dargan
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Pooh_Bear
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Re: Can I use my scholarship income to get a mortgage?

Postby Pooh_Bear » Sat Aug 02, 2014 3:43 pm

It’s a government scholarship so I don’t think I should have much problems getting it accepted. I don’t know how much I will be allowed to borrow so can you also tell me about this?

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Otto Dargan
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Re: Can I use my scholarship income to get a mortgage?

Postby Otto Dargan » Mon Aug 04, 2014 9:52 am

Hi Pooh_Bear,

The amount you may be able to borrow depends upon your situation. If there is:
  • Less than 12 months remaining on scholarship then you may be able to borrow up to 80% of the property value. Possibly more on a case by case basis. Most lenders will not accept your income in their assessment.
  • More than 12 months remaining on scholarship then you may be able to borrow up to 90% of the property value. If you are financially strong then you may even be able to borrow up to 95% of the property value.
  • More than 12 months remaining on scholarship and you take out a guarantor home loan then you may borrow up to 105% of the value of the property. This may allow you to borrow the stamp duty as well if it is not exempt in your state.
You can have a look at our website if you want to learn more about this. You can call us on 1300 889 743 if you want to discuss your situation directly with one of our experts. You can also fill in our free assessment form to see if you qualify for a loan or not.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Pooh_Bear
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Joined: Thu Jun 27, 2013 5:00 pm

Re: Can I use my scholarship income to get a mortgage?

Postby Pooh_Bear » Mon Aug 04, 2014 2:02 pm

I’ve got more than 12 months remaining on my scholarship so I think I’ll go for 90% of the property value. You’ve been a great help to me. Thanks a lot, Otto. I’ll give you a call by the end of this month to discuss my situation and loan needs. Goodbye.

Sonya
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Re: Can I use my scholarship income to get a mortgage?

Postby Sonya » Tue Dec 02, 2014 11:01 am

Hello!

I also have a small scholarship income which I want to use to take out a mortgage. With what I can gather, I think I can get it accepted but what concerns me is that I don’t even have a little deposit. Is there anyone who can suggest a loan option for me?

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Otto Dargan
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Re: Can I use my scholarship income to get a mortgage?

Postby Otto Dargan » Tue Dec 02, 2014 3:15 pm

Hi Sonya,

If you want to take out a mortgage without a deposit then a guarantor loan may be the only option for you. With a guarantor mortgage:
  • You do not need to have any savings.
  • You may be able to borrow the full purchase amount plus the money needed for stamp duty or any other associated costs.
  • You do not need to pay Lenders Mortgage Insurance (LMI).
  • Both investors as well as buyers for residential purposes may be able to take advantage of this product.
  • The interest rates may be exceptionally low in many cases.
It should also be noted that guarantors have a fixed liability and may only be pursued for the agreed guaranteed amount. The guarantee may be secured by either their property or a term deposit.

You can have a look at our website or give us a call if you want to learn more.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Sonya
Posts: 47
Joined: Thu Jul 25, 2013 7:02 pm

Re: Can I use my scholarship income to get a mortgage?

Postby Sonya » Tue Dec 02, 2014 8:43 pm

That sounds like a good idea. Yeah, I think I’ll give you a call by Thursday to understand more about this. Thanks for your help :)


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