Whilst many lenders and inexperienced mortgage brokers would have relied on Jordan’s taxable income to work out his borrowing power, Mortgage Corp understood that taxable income may not accurately reflect how much Jordan was actually earning.  We dug deeper to see if we could use information in his tax returns to help increase his borrowing power.

Our mortgage strategist Mortgage Corp noticed that as a result of new tax laws in the 2015 income year Jordan had been able to instantly depreciate the full cost of any capital business asset purchases up to $20,000. In that year he had purchased a car for his business for $19,000, some PCs and notebooks and other one-off equipment.

Because these were one-off deductions for amounts which were actually capital assets, we put together his loan application asking the lender to ignore these deductions and to increase his taxable income for loan application purposes. This increased his taxable income from $60,000 to nearly $100,000, increasing his borrowing power considerably. This enabled Jordan to get a self employed loan and finalise the property purchase he was after.

As a result, Jordan was able to purchase his dream house worth $650,000 with a higher rental return instead of being limited to a property worth $580,000.