LAFHA Home Loan

If you’re an Australian expat looking to buy a property in Australia, you may be eligible for a living away from home allowance (LAFHA) home loan. LAFHA is an allowance designed to help you cover the additional costs of living away from your usual place of residence, such as rent, food, and transportation.

However, did you know that LAFHA can be a valuable asset when you’re applying for a home loan? Lenders will typically consider your LAFHA payments as part of your income, which can help you increase your borrowing power. This means that you may be able to borrow more money to buy a home, or you may be able to get a lower interest rate.

Continue reading to learn about how you can use your LAFHA to achieve your homeownership dream back home.

What is LAFHA?

LAFHA is a fringe benefit that is paid to employees who are required to live away from their usual place of residence for work-related purposes. The allowance is designed to help offset the additional costs of living away from home, such as accommodation, food, and transportation.

The amount of LAFHA that an employee can receive is determined by a number of factors, including the employee’s salary, the cost of living in the area where they are working, and the length of their assignment.

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How Does LAFHA Work with Home Loans?

LAFHA can be used to increase your borrowing power when you apply for a home loan. This is because lenders will consider LAFHA as part of your income when they assess your loan application.

For example, if you have a salary of $100,000 and you receive $20,000 in LAFHA, your total income for the purposes of your home loan application will be $120,000. This will increase the amount of money that you can borrow, making it easier to buy a home in Australia.

What are the Eligibility Requirements for LAFHA?

To be eligible for LAFHA, you must meet the following requirements:

  • You must be an Australian resident.
  • You must be working away from your usual place of residence for work-related purposes.
  • You must be paid a taxable salary or wages.
  • You must be employed by an employer who offers LAFHA as a fringe benefit.

Which Lenders Accept LAFHA?

Not all lenders accept LAFHA as part of your income when you apply for a home loan. However, there are a number of lenders who do accept LAFHA, including:

How Much Can I Borrow with LAFHA?

The amount of money that you can borrow with LAFHA will depend on a number of factors, including your income, your expenses, and the lender that you choose. However, in general, you can expect to borrow up to 6 times your income, including LAFHA.

For example, if you have an income of $100,000 and you receive $20,000 in LAFHA, you could potentially borrow up to $600,000. However, it is important to note that this is just a general guideline. The actual amount that you can borrow will depend on your individual circumstances.

It is also important to remember that you will need to be able to afford the monthly repayments on your home loan. This includes the principal and interest payments, as well as any additional fees and charges. You should also factor in the cost of living expenses, such as food, transportation, and utilities.

When calculating how much you can borrow with LAFHA, you should consider the following:

What are the Tax Implications of LAFHA?

LAFHA is generally taxable, but there are a number of exceptions. For example, LAFHA is not taxable if you are working overseas for a temporary period of time.

Here are some of the tax implications of LAFHA:

  • LAFHA is treated as a fringe benefit. This means that your employer may have to pay Fringe Benefits Tax (FBT) on the amount of LAFHA that you receive.
  • LAFHA is included in your taxable income. This means that you will have to pay income tax on the amount of LAFHA that you receive.
  • You may be able to claim a deduction for some of your LAFHA expenses. For example, you may be able to claim a deduction for the cost of accommodation, food, and transportation.

If you are unsure about the tax implications of LAFHA, you should speak to a tax advisor. They can help you understand how LAFHA will affect your tax liability and they can advise you on how to claim any deductions that you may be entitled to. 

Get Help from a Mortgage Broker

LAFHA can be a valuable tool for Australian expat looking to buy a home in Australia. By using LAFHA, you can increase your borrowing power and make it easier to buy property back home.

If you’re considering using LAFHA to buy a home in Australia, you should speak to a mortgage broker or financial advisor. They can help you assess your eligibility for LAFHA and find a lender who will accept LAFHA as part of your mortgage application.

Talk to one of our mortgage brokers today to learn more about how LAFHA can help you buy a home in Australia. 

Get a free Australian mortgage assessment today.

Apply online to get a free recommendation with real rates and repayments.

Frequently asked questions

If you don’t receive LAFHA from your employer, you may still be able to claim it as a tax deduction. However, you will need to keep accurate records of your expenses.

You can contact the lender directly to ask if they accept LAFHA. You can also check the lender’s website or call their customer service line.

There are a number of benefits to using LAFHA to buy a home in Australia, including:

  • You can borrow more money, making it easier to buy a home.
  • You can reduce your monthly mortgage repayments.
  • You can build equity in your home more quickly.
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