When you are out there in the market, looking to buy some real estate, it can really help to know how much you can afford to borrow before starting the fabled house hunt.
How much you can afford?
While most Australians dream to buy their first home, many do not realise that actually ‘owning’ your home goes much beyond simply buying one. As you eye that conveniently located unit in your favourite suburb, have you given it a thought whether you would be able to afford the monthly repayments on your home loan?
How much can you borrow?
Depends on your home loan serviceability calculated by lenders according to a complicated formula using your income, expenditure and debts. However, you can use our easy to use Borrowing Capacity Calculator to know how much the banks are willing to lend to you. Make use of this handy calculator before you start looking for houses in the market to prevent wasting your time– lest you set your heart on a property that you cannot afford.
What else do I need to remember?
Something only seasoned investors will tell you – Do not borrow the full amount you can afford to, only because you can. Have you worked out what your home loan will cost you each month? Use our Mortgage Repayment Calculator to work out your weekly, fortnightly and monthly mortgage payments. Financial experts suggest that you employ no more than 28% of your monthly income towards servicing your home loan. Indeed, by doing so, you will be living under continual stress, not being able to enjoy your new purchase – your dream home.
If you think you cannot afford to make your purchase now, do not worry. This is the right time to set a savings target and plan a budget to meet your housing goals. Know the essentials of a good household budget.
Top tip – While planning your home loan, calculate your monthly repayments at a rate that is at least 2% higher than the current home loan rate. This will help you prepare for any future rate hikes.
It is possible to save thousands of dollars by simply comparing home loans online. Compare mortgage rates now to find the most competitive home loan deals in the market.