How much can i borrow?
Understanding how much borrowing capacity you have when buying your first home is an essential step for all newcomers to home ownership.
The question of “How much can I borrow?” is an important question to ask for all new home buyers. As daunting as it can be, understanding your borrowing power is important, and essential, for those wanting to get their foot in the door with their first home purchase.
Owning property in Australia is a dream for many young professionals and families. Aside from the financial benefits of owning a home, being able to call a slice of land your own is one of life’s most coveted accomplishments.
Financial factors
Before you start looking for a property, either to live in or as an investment, take a look at your finances from all angles and ask yourself a few important questions:
How much money do i have, that can be used as a deposit?
How much can i afford to spend on monthly repayments?
Is my credit history positive?
Have I assessed my household budget?
Am I planning to start a family soon?
Understanding where you stand financially and what changes may be coming your way in the near future can give you a clearer picture of how large or small your borrowing capacity should realistically be.
Figures that figure
How much you can comfortably afford to borrow comes down to two factors:
The size of your deposit. Most lenders require a minimum of 10 per cent of the total property cost.
How much you can afford in mortgage repayments.
If you’re currently renting a property, your weekly or monthly rental amount is a good indication of the starting figure for your mortgage repayments. This is the bare minimum, however. You will need to add other expenditures to this figure, such as council rates, land taxes, building insurance etc. New buyers may also want to consider single or joint income amounts. As a general rule, your mortgage repayments (along with other short and long-term expenses) shouldn’t cost more than 35 per cent of your gross income.
Use our calculator to figure out your maximum borrowing amount, and what the monthly/ fortnightly repayments would be on this amount.
Seek help
We can help you draft a realistic budget that fits in with your expected lifestyle to give you clarity on exactly what you can afford, and how purchasing your first home will impact on your monthly expenditure. We can also assist with negotiations on price, provide you with property reports which will give you peace of mind on the property’s value, and find the lender and loan product that is right for your specific needs & goals. We guide you through the application and settlement stages & are always available to answer questions or find solutions to your concerns.
If you would like to talk to us about purchasing your first home, please call us on (08) 8224 0044, or email info@capequity.com.au.
