Understanding your borrowing capacity is an essential step for all newcomers to home ownership. So, how much can you afford to borrow?
Owning property is a dream for many young Australians 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 converted accomplishments.
Financial factors to consider
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.
- Do I have enough money to pay for a deposit?
- Can I afford to make the monthly repayments?
- Do I have a good credit/repayments history?
- Have I assessed my household budget?
- Am I planning to start a family soon?
Understanding your financial position and what your financial changes might be in the future can give you a clearer picture of how much you can realistically afford to borrow.
Figures that figure
How much can you comfortably afford comes down to two main factors.
- The size of your deposit. Most lenders will require a minimum deposit of at least 5% of the total property cost.
- How much can you afford to repay in loan repayments each month.
If you’re currently renting a property, your rental amount is a good starting point to consider how much you can afford in loan repayments. This is a bare minimum and you’ll also need to factor in the extra costs that come with property ownership like rates, insurance and property maintenance.
Where to go for help?
Many people look to use a mortgage broker when shopping around for their first home loan, and for good reason. SB Lending mortgage brokers have a wealth of professional knowledge and industry experience and can compare hundreds of loans from a range of lenders to find the right loan for you and your personal circumstances.
Doing your due diligence from the very start will pay dividends when it comes to applying for you first home loan. Putting your financial position under the microscope and enlisting the help of a mortgage broker will put you in the best possible position to buy your first home.
Start by contact SB Lending now.