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Have your business profits increased significantly? – How this can affect your borrowing capacity – and its not what you think!
Your business is doing well and you have a marked increase in profit compared to last year. You know how much disposable cash you have available and have used online calculators to work out the repayments on your desired property.
Your confident you will be approved for the loan you want as you have completed a budget and are confident you have enough surplus cash to more than meet your loan repayments.
But here’s the catch….
Not all banks will look at your increased income in black and white.
In fact, many lenders will only consider a 20% increase in profits from one year to the next. This means that many banks, especially if mortgage insurance is involved, would consider the following scenario as follows –
In 2013 you may have earned $50,000, and in 2014 you’re business has flourished and you’re now earning $120,000 after expenses. While a select few banks will consider the $120,000, many will only allow a 20% increase on the $50,000 earnings. Meaning they will consider your income to be only $60,000!!!
If you want to avoid this pitfall, and ensure the bank you approach is on the same page as you in viewing your income, than contact us at Bee Finance Savvy on 1300 140 554 or email us at email@example.com
We know exactly where to take your loan to get the most favourable outcome.
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