Your Borrowing Power
There are a number of ways that helps us overall determine exactly how much you can borrow to be able to service your loan. Essentially the basic calculation looks at:
- Your Loan: interest rate and loan period
- Your Income: single or joint application, number of dependents, your net income, partners net income, any other net income.
- Your Expenses: loan repayments, credit card repayments, general monthly expenses.
There are a number of borrowing power calculators that are developed by the various lending institutions that can overall help you determine your borrowing power.
To understand your overall income and expenses in detail it would be worth going through creating a detailed budget. This helps you align your expectations for affordability.
To purchase your first home you will need to have at least 5% of your first home amount. If you have less than a 20% deposit, there is a high probability that you will most likely need to take Lenders Mortgage Insurance (LMI).
Also as a first home buyer, you may be eligible for the First Home Owner Grant (FHOG) which will also contribute to your deposit. This is essentially a government scheme that helps first home owners like you to purchase your own home.
There are a number of other costs involved in purchasing a new home and they include:
- Stamp Duty
- Lenders Mortgage Insurance (only if you have a deposit below 20%)
- Legal Fees
- Building & Pest Inspection
- Property Valuation
- Moving Costs
Finding The Right Loan & Applying
Once you have determined your overall affordability, then it is very important to find the right loan that suits your overall individual circumstances and that will essentially help you pay off your loan sooner and overall help you get to the next purchase phase.
There are a number of features that apply to loans and these include:
- Variable or fixed interest rates
- Having a mortgage offset account
- The ability to have a redraw facility
- The ability to make additional payments
- Flexibility in the frequency of payments
To understand exactly what is right for you and your circumstances, we then go through the process of :
- having a meeting
- acquire the specific information from yourself for a loan application
- suggest and apply for a loan that is right for you and will most likely be approved
- finally manage the loan settlement process on the day of purchase
NSW Fair Trading have created a resource to better understand the process of buying a property, click here to be directed to that area and gain a little more information.