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Maximising Inner South Borrowing Power On Executive And Contractor Pay

How Alexandria and inner south executives, IT consultants and contractors can turn complex packages, day rates and profit share into safe, realistic borrowing power without overestimating income.

30 Aug 2026Updated 30 Aug 20266 min read

Key Takeaway

This article explains how Australian lenders assess executive and contractor income for borrowers in Alexandria and Sydney’s inner south, typically shading bonuses, day rates and profit share by 20–40% and testing repayments at least 3% above the actual rate. It outlines how PAYG, contractor and profit-based income are treated differently, provides a numeric example of safe borrowing power, and gives practical steps to document income properly and avoid overestimating capacity. Readers are advised to stress-test loans and align tax, loan structure and documentation before applying.

Maximising Inner South Borrowing Power On Executive And Contractor Pay

If you’re an executive or contractor around Alexandria or Green Square, your true borrowing power is usually lower than your package headline, because banks shade bonuses, day rates and profit share, then test repayments at a rate at least 3% higher than today’s interest rate (APRA guidance). The trick is turning your actual provable income into borrowing power without kidding yourself about what you can safely afford.

Here’s the quick rule: expect lenders to use only 60–80% of irregular income and to model repayments at current rates plus 3%. Aim to keep total home and investment repayments under roughly 30–35% of after‑tax income at that stressed rate, a safety band that keeps you out of mortgage‑stress territory based on Roy Morgan definitions and our existing inner‑Sydney work.

Desk with laptop and contractor documents calculating borrowing power. Translating day-rate and bonus income into realistic borrowing capacity.

How banks really see your executive or contractor package

1. PAYG executive in the inner south

For inner south executives (tech, media, aviation, professional services), lenders usually split income into:

  • Base salary – counted at 100% if stable and ongoing.
  • Bonus / STI / commission – typically averaged over 2 years and shaded by 20%. A strong single year may still be cut back.
  • LTI / RSUs / profit share – banks want a 2–3 year history and evidence it will continue. Many only take 50–80% of the average.

For example, a Green Square exec on $230k base plus $70k average bonus and $40k average RSUs does not get assessed at $340k.

A typical bank might use:

  • Base: $230k
  • Bonus (80% of $70k): $56k
  • RSUs (60% of $40k): $24k
    Assessed income: $310k, not $340k.

And that’s before tax and living expenses (HEM) are applied.

2. Day‑rate IT contractor near Alexandria

For a day‑rate contractor, banks usually convert your rate to an annualised figure, then shade it and strip out gaps:

  • Day rate: $1,200
  • Days counted: often 220 (to allow for leave, gaps, sickness)
  • Annualised: $264,000
  • Shading: many lenders then take 80–90% for prudence.

So your $1,200 day rate might be assessed closer to $210k–$240k, not the $316k number you get from multiplying by 5 days and 52 weeks.

If you operate via a company or trust and leave profits in the business, lenders may only use the component that reliably flows to you. For a deeper dive on this, see /insights/using-company-trust-investment-income-serviceability-story.

3. Profit share, distributions and lumpy income

If part of your package is:

  • partner profit share,
  • discretionary trust distributions, or
  • director fees on top of a salary,

lenders normally average 2 years of tax returns and financials and adjust for one‑offs.

They may:

  • exclude unusually good years,
  • add back some tax‑effective deductions (like non‑cash depreciation), but
  • ignore paper profits that never reach your personal bank account.

That’s why planning distributions 12–24 months before a purchase matters more than last‑minute tweaks.

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Frequently asked questions

Can I refinance as a contractor if my income dropped last year?▾
Yes, but lenders will focus on stability and recent trends. Many will average the last two years and look closely at the most recent 6–12 months of credits to your account. If income has dipped, strong liquidity in offsets and low other debts can still support a refinance, but don’t expect to borrow at your previous peak capacity.
Do lenders prefer PAYG over contractor income for the same dollar amount?▾
Generally, yes. A stable PAYG salary is usually treated as less risky, so banks count 100% of it, while contractor income is often shaded or requires a longer history. However, with solid tenure in the same industry and clear contracts, some lenders will treat experienced contractors almost on par with PAYG for borrowing capacity.
How long should I be in a profit share or partnership before applying for a loan?▾
Ideally you want at least two full financial years of profit share or partnership income before applying. This lets lenders see a pattern, not a one-off bump. If your role or share has recently increased, a broker can sometimes argue for a higher assessed income using year-to-date figures and partnership agreements, but conservative assumptions still apply.

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