How much can paramedics and ambulance officers borrow?
Essential services employees like paramedics and ambulance officers can ideally borrow:
- Up to 105% of the purchase price with a guarantor loan.
- Up to 100% with a no deposit loan subject to an extensive approval criteria.
- Up to 80% with special interest rate discounts.
Speak to our mortgage brokers by calling us at 1300 889 743 or filling in our free assessment form so we can assess your overall situation to get you the best home loan.
What’s changed in the Emergency Services Credit Policy?
From 18 February 2020, the Emergency Services Credit Policy has been amended to help permanent front-line employees of emergency services, like police officers, firefighters and rescue workers, nurses, ambulance officers and paramedics, and defense forces, apply for a home loan with an increased borrowing power.
What forms a major part of earnings for most emergency services workers, besides their base income, is a combination of overtime compensations, various allowances and relevant penalty payments. As such, these payments make for a regular and standard income source for many of them.
Previously, the policy accounted for volatility of such non-base incomes while servicing the earnings of key workers for home loan application, and only assessed all non-base earnings at 80%.
With the latest policy changes, eligible occupations like ambulance officers and paramedics, firefighters, police officers, etc can have their non-base income and allowances assessed at 100%, thereby increasing their borrowing power.
What is the reason for this policy change?
The policy was changed as what was considered volatile income for ambulance officers and paramedics and other key workers is now considered standard income.
For most of these key workers, a major portion of their standard weekly income comes from overtime compensations, allowances and penalty payments.
Since these payments form a part of their contractual provisions of employment, lenders should assess these non-base income at 100% to meet serviceability.
The emergency services employees who are eligible for the 100% assessment of their overtime earnings are:
- All active-duty, permanent front-line fire officers, fire fighters, police officers, ambulance officers, nurses and paramedics currently based at their duty stations.
- Preferably, all applicants who are employed by the same employer over the previous and current financial year. If the employer has changed within this time period, previous employment should, at least, be in the same role in the same industry, if not a higher role. And, the applicant must be able to provide a PAYG summary from their previous employer.
Please note that casual front-line employees and non front-line, office-based admin staff are not eligible for this credit policy.
What income types are serviceable at 100%?
As an emergency services employee, the income types that are serviceable at 100% for you are:
- Overtime compensations
- Shift allowances
- Penalty payments
- Industry-specific payments
- Vehicle allowances
Please note that the following non-base incomes will still be assessed at 80%:
- Interests earnings
- Dividend income
Also, any pre-tax or salary deduction will also be assessed as per the previous standard practice.
Can you give me an example of improved serviceability with the new policy change?
Let’s meet Gene who is currently working as a paramedic.
His current payslips have an annualised base income of $85,000 with $25,000 in overtime payments.
His PAYG summary from previous year shows an earning of $130,000.
Before the change in policy, Gene’s overtime was only serviced at 80%, which amounts to $25,000*80% = $20,000. With her current year’s base earnings, her usable gross income for serviceability is $20,000 + $85,000 = $105,000.
Now, with the change in policy, her overtime is serviced at 100%. So, his usable gross income for serviceability is $25,000 + $85,000 = $110,000.
Considering the lower earnings of his current and previous year means, lenders will use $110,000 for serviceability. Using the new policy, his income for serviceability increases by $110,000 – $105,000 = $5000.
What income documents will you need?
To apply for a home loan under this new policy, you will require one of these two documents:
- Your last two consecutive payslips, or
- One YTD payslip, covering at least two pay cycles.
Plus, one of these documents:
- Your latest PAYG summary from previous financial year, or
- Your latest tax return and ATO Notice of Assessment (ATO NoA) from previous financial year.
When can you apply for a home loan under this policy?
You can use the new Emergency Services Credit Policy to apply for your home loan when you do not meet serviceability as a standard PAYG employee.
But you need to be able to show the evidence of your income from previous year – either a PAYG summary, a tax return and ATO NoA.
You also need to have a clean credit report free from defaults, bankruptcies, etc.
How can we get the best deal for your home loan?
Our senior mortgage brokers have previously worked at credit departments of some of the major banks, and know the lending policies of over 40 lenders. That, in turn, enables them to negotiate better terms for your mortgage application.
We can help you get the best deal on your mortgage by:
- Sending you free property reports and suburb reports from our subscription so that you can make informed decisions based on the up-to-date information about the property market.
- Getting your bank valuations free of charge so that you can pick a lender who can give you the best property valuation.
- Submitting your mortgage application to a lender, that suits you the best, from our panel of over 40 lenders, which includes some of the major Australian banks and specialist lenders.
- Charging you zero extra fees for using our service.
Please feel free to speak to our specialist mortgage brokers by calling 1300 889 743 or filling in our no-obligation enquiry form to help you apply for a home loan.