What savings do you currently have?
Most lenders will want to see that you are able to save consistently and will usually require your last six months savings history prior to considering you for a loan.
If you are able to afford the repayments some lenders will loan you up to 95% of the property purchase price. This may even allow you to add mortgage insurance costs to the loan as well-meaning you may be able to borrow up to 97% of the property value. However even in this situation the lender will require you to have at least 5% of the property value in genuine savings as well as enough money available to cover the other costs of purchasing a property.
Sitting down with your trusted mortgage professional will ensure you know which options are available to you.
What current debts do you have? The amount of current debts that you have will affect how much you can borrow. You may want to consider reducing your current debts prior to purchasing your first home.
Owning your own home should be an enjoyable experience not a financial burden.
You may wish to consider what concessions you are prepared to make to own your own home. Think about how repayments on your new home will affect your current lifestyle and whether borrowing to your maximum capacity will prevent you from doing things you enjoy. You may wish to consider borrowing a smaller amount with which you are completely comfortable.
Talk to a mortgage professional about what you feel comfortable in repaying each month prior to making decisions about your loan amount rather than just borrowing the maximum that you can. If you are planning a family in the near future you may also want to consider how you will manage your repayments on just one salary.
How much you can borrow depends on several factors including:
- Your income
- What deposit is required
- Eligibility for First Home Owners Grant
- Other loan repayments and commitments
An important factor to consider is how comfortable you are financially to repay the proposed loan. It is imperative that you do not overstretch yourself. It is best if you sit down and work out a budget and understand how much you have left over to repay a loan comfortably. You should also factor in interest rate movements as this will affect your repayment amount.
Email or phone David Seymour on 0418 785 747. You can also Follow David on Facebook or Connect on LinkedIn for his Regional Finance Solutions news and updates in real time.
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