What is Net Income Surplus – and why it changes your ability to loan

Net income Surplus (NIS) – Can you get a loan?

We’ve covered this briefly – however, these are the basics

Lenders, banks or a broker will complete the following steps

Step 1

1️⃣ aggregating all sources of income (including rent on properties the borrower owns)
2️⃣subtracting living expenses, interest and principal payments on the new debt
3️⃣subtracting the servicing costs of any other debt the borrower may have

For example, you PAYG statement shows you earn $5,000 per month after tax. If you are joint apply – its the total of both your incomes.

For your living expenses, it will include groceries, utilities, phone, public transport/car, and entertainment. It will also include rent if you are currently paying it.

In Sydney or Melbourne – the below are very rough estimates

Living cost in Australia for one person: $2,835 per month
Average living expenses for a couple: $4,118 per month
Average monthly living expenses for a family of 4: $5,378

To continue our example, lets say our $5000 earner is a single person in Sydney, with the above expenses (including rent). His NIS is $2165 per month

Step 2

A percentage of the NIS will be the available monies for a loan. These are not published, but a prudent estimation would be 30% of NIS on the low side and up to 35% of your total monthly income on the high side.

In our example, it would be reasonable to estimate $757.75 per month would be available to our single person on Sydney, up to $1750.00 per month.

Step 3

In the above example, that ranges a loan from $175,000 to $350,000. That’s quite a range!

Check our other articles to understand what would influence these amounts


Keep me updated with finance news and tips

Sign up for our 7 part Property Investment email course. Learn everything to start investing in property!

    By sending a request you agree to our Privacy Policy

    Are you ready to buy? Talk to an Aussie Mortgage Broker!

    Would you be interested to talk to an Aussie Mortage Broker about finding the right home loan?*

    * Aussie is a trade mark of AHL Investments PTY Ltd. Aussie is a subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124. © 2018 AHL Investments Pty Ltd ABN 27 105 265 861 Australian Credit Licence 246786. By submitting this form, you agree to the Aussie Privacy Policy.

    Thank you for interest!

    We will send you 7 emails containing all you need to know to get started.

    Articles you might also like