The family tax benefit mortgage is an incentive offered by the Australian government, which allows Australian families with low annual earnings to meet their basic cost of living.
Is the Family Tax Benefit Home Loan considered a source of income?
There are different lenders who consider it as a source of income at the assessment stage of a mortgage application. If you receive any benefit from Centrelink’s Large Family Supplement scheme, it is also included in your assessment.
You have to fulfil the following lending requirements in order for a lender to approve the family tax benefit home loan:
- Requirements in regard to your salary
- Capacity to repay the loan
- Good credit standing,
- Healthy asset position
In addition to the above, a borrower has to submit the most recent Centrelink statement. You can download it from the web portal of the Department of Human Services by entering your details.
Only a few banks accept the family tax benefit income if children are over 11 years of age. However, there are some specialist lenders who approve the family tax benefit payments regardless of how old your children are.
How much can I borrow?
There are no specific borrowing requirements in the case of the family tax benefit income. The borrowing limit is based on your overall income and current interest rates in the market. Banks are mainly concerned with the risk associated with your loan application.
Interest Rate – Same or Different?
You get the same interest rate with the family tax benefit home loan compared to a regular home loan. If it is your only source of income and you are a single parent with children, you will have to apply via specialist lenders. They may charge you a premium of about 1.5 percent to 2 percent above the standard interest rate.
Can I Get the Same Package with Family Tax Benefit Home Loan?
And the answer is yes! You can certainly get the loan package similar to a regular standard package. But if it is your only source of income, you will only get basic packages. This means you would only be able to access the redraw facility, but no additional features, such as a line of credit, credit card, or an offset account.
Requirements for Single Parents
You may qualify for the family tax benefit home loan if you fulfil one of the following conditions:
- You have sufficient amount of equity or you already own a property outright
- You cover the deposit requirement of around 50 percent of the property price.
Mechanism of the Family Tax Benefit Home Loan
If you are eligible for this scheme, you can select either of the two methods to receive payments, i.e.,
- Fortnightly instalments, or
- Annual lump sum payment.
Family tax benefit scheme comprises of two parts, Part A and Part B. The first part consists of a payment received for every child and part B represents the payments for helping families and single parents with one source of income.
You can claim the amounts on the basis of the number of children you have, their ages, and your family income. Given below is a brief overview of Part A and Part B.
- If the child is aged between 0 and 12, maximum fortnightly payment rate is $179.76
- For a child between 13-19, it is $233.94
- If he/she is between 0 and 19, the rate is $57.68 with respect to certain requirements
- Every child gets a supplement of $726.35 when the financial year ends after you balance all the payments.
Payment mentioned in this part depends on how old your youngest child is.
- If your child is under the age of 5, the fortnightly rate is $152.88
- If the child is between the age of 5 and 18, the rate will be $106.82
There are a number of lenders in the market who will accept your family tax benefit income while assessing your loan application. However, it is wise to consult your mortgage broker as he or she can guide you in the right direction and help you find the right lender. By our services, you will be in a better position to make a decision for the benefit of your family.
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