Can you afford to buy?
Before you start looking for your dream home, there are two key questions that need to be answered:
What can you afford to borrow?
and
What can you afford to repay?
How much can you borrow?
Working out your borrowing power helps you narrow down your property search, and gives you an idea of what the financial commitments of your mortgage could be.
Do your calculations
Check out this simple Borrowing Capacity Calculator from Moneysmart. It works out a rough estimate for you and is a great starting off point.
Consider applying for pre-approval
With pre-approval in place, you can be more confident of what your purchase limit is, and what you’re actually able to buy. Having a loan pre-approved (typically valid for 3 months) is especially handy at an auction.
Know the criteria
Your borrowing power is typically based on your income, debts, financial commitments, credit history, loan type, employment history, savings, stability of residence and assets.
Talk to our experienced brokers
One of our expert brokers will take you through all of your available options. They’ll conduct a borrowing eligibility assessment as well, so you’ll have a clear idea of what you can afford.
Check your borrowing power
How much can I borrow?
What can you afford to repay?
Your home-buying budget isn’t just based on what you can borrow. You also need to be realistic about your ability to service the loan – can you comfortably make your repayments?
Start creating a budget
It’ll help you see what you’re spending, where you can save, and what you could afford to repay every fortnight/month.
You will also need to provide a list of expenses during the home-buying process, so this will help you be more prepared.
Consider the unexpected
Factor in potential events such as interest rate rises, work changes or even accidents, and plan for a financial buffer. Ideally, you should always have some spare cash after paying all the bills (including the mortgage). As a guide, your mortgage repayments should not exceed 30% of your gross (pre-tax) income.
Talk to the mortgage brokers here at 360 Degree Services
Want to find out more about balancing your borrowing capacity with what you can comfortably afford? Our brokers will take you through the available options and give you expert advice.
Check what your repayments will be
Repayment calculator