Canberra’s public servants are unlocking some of the most generous borrowing perks in Australia. Photo: izusek.
Australia’s top mortgage lenders have shifted their ideal client profile, experts say — and it’s good news for public servants.
Securing a home loan with a small deposit while avoiding hefty fees was once a privilege reserved for doctors, lawyers and high-flying accountants. Now, nurses, paramedics, teachers, police and public servants are stepping into the VIP category.
This comes as no surprise to Goodwin Home Loans managing director Matt Goodwin, who notes that the public sector workforce holds major drawcards, including unmatched job security.
“Banks know how secure government jobs are,” he says.
“They know you’re going to get that stable income pretty much forever.”
Job stability is only part of the equation, however. Strong earning potential and flexible income-calculation policies truly set these workers apart.
Matt notes that while most borrowers need a 20 per cent deposit to avoid lenders’ mortgage insurance (LMI), health workers such as nurses and midwives now routinely borrow with 10 per cent without paying LMI. Medicos can borrow with as little as 5 per cent.
This VIP treatment extends beyond frontline medical workers. Mainstream public sector staff, specifically those at the APS6, EL1 and higher levels, are unlocking similar bank-specific perks.
“It’s a brand new LMI waiver policy that currently only one lender is offering,” Matt says. “In a property market where borrowing capacity is everything, it’s good to see the perks broadening.”
Chief among these perks is the novated lease — a strategy popular among public servants to reduce taxable income, with potential six-figure savings over a career.
In fact, the ACT sees more novated leases per capita than any other state or territory, though maximising their value often hinges on broker expertise.
Because novated leases bundle finance repayments with running costs — like fuel, registration, and insurance — into pre- and post-tax deductions, they present a major trap for careless brokers.
“When assessing loan applications, banks automatically apply a baseline benchmark for general living costs, known as the Household Expenditure Measure (HEM). Because HEM calculations already factor in routine vehicle running costs, taking a borrower’s total lease deductions at face value effectively double-counts their motor vehicle expenses,” Matt says.
“Some brokers mistakenly deduct the full salary-sacrificed amount from a borrower’s income, which can be $2000 or more a month. But some specialised lenders will strip out the pre-packaged running costs and assess only the actual finance component. We could be talking hundreds of thousands of dollars difference in borrowing capacity.”
The Goodwin Home Loans team identifies lenders that turn the unique perks of government jobs into real borrowing power. Photo: Goodwin Home Loans.
Flexible income calculation is another major advantage lenders offer these workers.
Matt points to a generous policy rarely seen in the private sector: 100 per cent income recognition on overtime and penalty rates for frontline and emergency staff.
“In a lot of other industries where you work overtime, lenders discount your overtime to about 80 per cent of what you actually get,” Matt says.
“Professionals like nurses or paramedics often earn huge amounts in penalty rates because they’re working late nights, early mornings, overtime or in a hospital emergency department. It can make a big difference to their borrowing capacity.”
Under public benevolent income arrangements, many health and non-profit workers can also leverage generous tax-free salary sacrificing to boost their borrowing power.
“People in these roles can salary sacrifice up to around $17,550 for general living expenses like rent or mortgage repayments, meals and entertainment, and banks will add those tax-free benefits straight back in, allowing them to count 100 per cent of that value as usable income,” Matt says.
This financial favourability continues even after public servants retire.
Those on legacy pensions such as the Commonwealth Superannuation Scheme (CSS) and Public Sector Superannuation (PSS) can often bypass a major hurdle faced by mature applicants.
“Generally, when you’re over a certain age, you need to show an exit strategy into retirement,” Matt says.
“CSS and PSS are seen by lenders as ongoing indefinitely, so no exit strategy is needed to get a strong borrowing capacity.
“There are so many benefits for public servants out there — a broker who knows how to maximise yours will make all the difference.”
For more information, visit Goodwin Home Loans.
