In order to demonstrate you have made a reasonable attempt to calculate servicing, multiple calculations may need to be made. These can include but are not limited to the Mercury Borrowing Capacity calculator and Lender Servicing calculators.
As per ASIC guidelines, please use these calculations with other sources to get a reasonable estimate of servicing ability.
How to add a Borrowing Capacity Calculator to an Opportunity
From the Calculations section click Add
You can also create Borrowing Capacity calculations in the Research Application.
From the Borrowing Capacity section open a new tab to create a new Borrowing Capacity calculation.
Before you start your Borrowing Capacity Calculation
Please make note of the following:
- The Borrowing Capacity is calculated using a loan term of 360 Months (30 Years) and P & I. All calculations are an estimate only.
- The Issues Icon ( ) will appear if there is a discrepancy between the result displayed and the lender's calculator, i.e. changes in HEM Tables. You can find out what the issues are, if you hover your mouse over the icon. Like this;
To calculate negative gearing on an existing investment property, kindly use lender’s serviceability calculator for accurate results
- Enter all figures as Gross.
Why Mercury Borrowing Capacity Calculator Assessment rates are high comparing to lender serviceability calculator?
Lenders uses a default product and its variable rate for serviceability calculations in Mercury Borrowing Capacity calculator.
Whereas in lender serviceability calculator, you can choose the product and the rate of your choice.
Lender Serviceability Calculator
Assessment rate = [Product Rate of your Choice + Buffer]
Mercury Borrowing Capacity Calculator
Assessment rate = [A default Variable rate + Buffer]
How to do a Calculation
- The below screen will appear
- Enter the basic loan details
- Click the button to add a new Person.
- Use the drop-downs to add Income and Expense items
Note: You can override the Living Expenses for the applicant. If the expenses are lower than the lender's amount, their amount will be used.
- Enter the Real Estate details in the Assets section by clicking the button.
- To add Rental Income for a future Investment property or Investment property being refinanced. Just add a New Asset and select Investment and Purchasing. The existing mortgage fields will be removed. Just add the expected rental income amount and frequency.
Click on Calculate Servicing Amounts and the results will populate in the right hand panel.
- Only Real Estate that is not marked as 'To be purchased' or 'Clearing from this Loan' on the opportunity will populate here.
- 'Use as Security' is used where the existing property is being included as security with the new application.
- The 'Use as Security' option will increase the Borrowing Capacity results as per the lender calculation.
- When 'Use as Security' is checked, 'Clearing' will be automatically checked as it assumes a different lender and clearing. However it can be unchecked if it's currently the same lender and not to be cleared.