What is Serviceability Assessment?
When you apply for a home loan, lenders need to determine whether you can afford the loan amount you're requesting. This process is called serviceability assessment. It's a critical step in your home loan application that evaluates your income, expenses, and financial commitments to ensure you can comfortably meet your loan repayments.
For Queensland Ambulance Service employees, understanding serviceability is particularly important because your shift patterns, overtime, and allowances can affect how lenders calculate your income. Working with a mortgage broker who understands your employment structure can significantly improve borrowing capacity and help you access Home Loan options from banks and lenders across Australia.
How Lenders Calculate Serviceability
Lenders use a detailed formula to assess whether you can service a home loan. They examine several key factors:
Income Assessment
- Base salary from Queensland Ambulance Service
- Regular overtime (typically averaged over 6-12 months)
- Shift allowances and penalty rates
- Additional income from secondary employment
- Rental income from investment properties
Expense Evaluation
- Living expenses (often calculated using the Household Expenditure Measure)
- Existing debts and financial commitments
- Credit card limits (even if you don't carry a balance)
- Personal loans and car loans
- HECS/HELP debt repayments
Lenders also apply a buffer rate when calculating home loan repayments. This means they assess your ability to repay the loan at an interest rate higher than the current home loan interest rate, typically adding 2-3% to protect against future rate increases.
Income Assessment for QAS Employees
As a Queensland Ambulance Service employee, your income structure includes components that require careful documentation:
Base Salary: This is straightforward and fully assessed by all lenders.
Overtime: Most lenders will accept overtime income if it's been consistently received over 6-12 months. You'll need to provide payslips and tax returns to demonstrate this regular income.
Allowances: Shift penalties, on-call allowances, and other regular allowances can often be included. However, different lenders have varying policies about which allowances they'll accept and at what percentage.
Working with a specialist broker ensures your income is presented accurately to maximise your borrowing capacity. You can learn more about this on our home loans for Queensland Ambulance Service employees page.
Ready to get started?
Book a chat with a Finance & Mortgage Brokers at Paramedic Loans today.
Factors That Impact Your Serviceability
Several factors can either strengthen or weaken your serviceability position:
Positive Factors:
- Stable employment with Queensland Ambulance Service
- Regular savings history showing financial discipline
- Low credit card limits
- Minimal existing debts
- Larger deposit reducing the loan to value ratio (LVR)
- Additional income sources
Negative Factors:
- High credit card limits (even with zero balance)
- Multiple personal loans or car loans
- Buy now, pay later accounts
- Irregular employment history
- High living expenses
- Recent credit applications
Understanding Loan to Value Ratio
The loan to value ratio (LVR) plays a significant role in serviceability. This ratio compares your loan amount to the property's value. A lower LVR generally means:
- Stronger serviceability position
- Access to lower rates
- Potential to avoid Lenders Mortgage Insurance (LMI)
- More home loan products available to you
For Queensland Ambulance Service employees, specialist LMI waivers for paramedics may be available, allowing you to borrow up to 90% LVR without paying LMI. This can significantly improve your ability to achieve home ownership sooner.
Improving Your Serviceability
If you're concerned about your serviceability, there are several strategies to improve your position:
Reduce Credit Card Limits: Lenders assess credit cards at their limit, not the balance. Reducing or closing unused cards can substantially improve borrowing capacity.
Consolidate Debts: Consider debt consolidation loans for paramedics to streamline multiple commitments and potentially reduce your overall repayments.
Increase Your Deposit: A larger deposit reduces your LVR and the loan amount required, making serviceability easier to achieve.
Document All Income: Ensure your mortgage broker has access to all payslips, tax returns, and employment contracts that demonstrate your full income including overtime and allowances.
Review Your Expenses: Understanding and managing your spending can improve your serviceability position.
Serviceability and Different Loan Types
Your serviceability assessment may vary depending on the home loan products you're considering:
Principal and Interest vs Interest Only: Interest only loans require different serviceability calculations. Learn more about interest only loans for paramedics if you're considering this option for an investment property.
Variable Rate vs Fixed Rate: When calculating home loan repayments, lenders assess variable interest rate loans with a buffer, while fixed interest rate home loan applications are assessed at the fixed rate plus a buffer for the variable period.
Split Loan: A split loan combines fixed and variable portions, with serviceability calculated for each component.
Getting Home Loan Pre-approval
Once you understand your serviceability, obtaining Home Loan pre-approval is your next step. This process provides clarity on:
- How much you can borrow
- Your estimated repayments
- Which lenders are most suitable for your situation
- What documentation you'll need for formal application
Home Loan pre-approval typically lasts 3-6 months and gives you confidence when searching for properties. Our getting loan pre-approval page provides detailed information about this process.
How Paramedic Loans Can Help
At Paramedic Loans, we specialise in understanding how lenders assess Queensland Ambulance Service employees. We know which lenders offer the most favourable income assessment policies for your employment structure, and we can help you compare rates across multiple institutions.
Our expertise includes:
- Presenting your income in the most favourable way to lenders
- Identifying lenders with favourable serviceability policies for QAS employees
- Accessing home loan packages with rate discount options
- Structuring loans with features like offset account and portable loan options
- Helping you understand current home loan rates and home loan features
Whether you're purchasing your first home loan, refinancing an existing loan, or looking to invest in property, understanding serviceability is fundamental to achieving your property goals and securing your financial stability.
Call one of our team or book an appointment at a time that works for you to discuss your serviceability and explore your home loan options.
