HOW MUCH CAN I BORROW?

Reception • Apr 22, 2022

Of course, this is an important question; but it’s one thing to know your borrowing power and another to see what you can REALLY afford!


When taking out a mortgage, your choices have long-lasting implications, so you need to approach borrowing with a healthy attitude; let’s take a look!

WHAT CAN YOU REALISTICALLY AFFORD?

The first step is to get to know your numbers!


What is coming in and out weekly and monthly? List all your income and expenses; get crystal clear on everything moving in and out of your accounts.


Once you have done that, add in an additional mortgage payment expense; what does this look like? How much can you afford to put towards it and still live the lifestyle you desire?

ARE YOU COMFORTABLE WITH REPAYMENTS?

You deserve to live the lifestyle you want; however, it can be helpful to look at where you may be able to cut down or find an alternative to some of your regular spending. That may be to do with social activities, memberships, and regularly eating out; small expenses like this can add up over time, meaning you may have more money than you think to put towards your repayments.

ANY IDEA WHAT THE FUTURE MAY HOLD?

We don’t expect you to have a crystal ball and know the future, but maybe you are a two-income household that will temporarily change to a one-income home as you grow your family. Or maybe your earning capacity is due to increase soon. 

 

There are many possibilities and ‘what ifs,’ but if you have some substantial future changes on the horizon, factor them in as they can affect your affordability. 

In addition to asking yourself the above questions, we have a few little tips for you;


  • When borrowing, don’t over commit and remember to consider your lifestyle
  • Be realistic; get into the market with what you can afford and then build up to your forever home as you grow your equity and earning capacity
  • Keep in mind your life plans as to not put pressure on yourself if your circumstances are likely to change
  • When purchasing a property, remember there are extras to consider, for example, stamp duty and mortgage duty, relevant property inspections, solicitors and application fees, and ongoing commitments, including council rates, possible strata or body corporate costs, and utility bills.

Our role as mortgage brokers means that we get to know you and your circumstances personally, so we may have more flexibility around a home loan than if you were to go straight to one of the big banks, which will only look at your deposit and income.


We are always here to help guide you to your best financial future. If you have any questions, please reach out to us.


Here you will find a range of helpful calculators, including ‘Borrowing Power’, which will assist you with the ‘How much can I borrow’ question and a mortgage calculator (Australia)


You can also look here at a Property Market Research tool to find information about the current property market.


We hope you have found this article helpful, be sure to share it with your friends and family who might benefit from it too!

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01 Aug, 2023
Navigating the World of Mortgages: What borrowing capability do you have? Deciding to buy a house is an exciting milestone, and we're here to accompany you through the intricate world of mortgages. With the changes to interest rates that have happened over the last twelve months, it's essential that we are prepared and approach borrowing with a healthy attitude, as your choices now will have long-lasting implications, so let's ensure you're well-prepared for this homeowner journey. What should I consider when considering my borrowing limits? First, let's figure out how much you can borrow without sacrificing your peace of mind and daily joys. The key here is to measure your income against your expenses, including the potential mortgage repayments. A general rule of thumb: try to keep your mortgage repayments to no more than 35% of your gross monthly income. When it comes to borrowing generally, the higher your deposit and the higher your income, the more they should be willing to lend. The good news is we have more flexibility as mortgage brokers than the big banks, so we can look at your circumstances closer. Now, let's discuss some essential factors to consider when figuring out your borrowing limits. How much debt can you handle? Think about your lifestyle and what you're willing to give up versus what's non-negotiable. Be realistic about your dream home. Start with something affordable and gradually work your way up as your earnings grow and your equity increases. Think about the future. Are you planning to start a family, change jobs, or experience significant life changes? Factor those possibilities into your calculations. Keep an eye on interest rates and consider how further rises might affect your ability to make repayments. Reminder; A reminder that when purchasing a property, you will also need to factor in further expenses, such as, pay stamp duty, pest & building inspections, conveyancer fees, application fees, council rates, possible strata or body corporate costs, and utility bills to factor in. In Summary We'll help you evaluate your financial situation, research and compare over thirty lenders and loan options, and gather the necessary documentation to help you whether you are purchasing your first home or refinancing. What should I do next? Our dedicated team is committed to nurturing your financial well-being and helping you achieve a stronger and more secure future. Call our office on (03) 8657 8664 to organise a time to chat, and we also invite you to take advantage of our free resources by heading to our website. https://www.futurefinancegroup.com.au/
By Bree Jones 19 Jun, 2023
At Future Finance Group, we understand that financial hardship has become a pressing concern for many homeowners across the country, including Melbourne. We want to help you explore the benefits of refinancing your mortgage. By assessing the right time to refinance and understanding the steps involved, we can guide you to potentially save money, access improved loan terms, and secure a more favourable financial future. What are the Benefits of Refinancing? During these challenging times, refinancing your mortgage can bring meaningful advantages. Firstly, it may allow you to take advantage of lower interest rates, reducing your monthly mortgage payments and offering much-needed relief. Additionally, refinancing allows switching from a variable-rate to a fixed-rate mortgage, ensuring stability and protection against future rate increases. By consolidating high-interest debts, you can streamline your finances and gain more control over your monthly obligations. Also, refinancing can unlock equity in your home, providing funds for essential expenses or other financial goals. Assessing the Right Time to Refinance Working out when to refinance can be challenging, mainly because we do not know what the future will bring. We are here to look at your personalised options and work with you to ensure your financial security. We can consider many factors, such as your credit score, home equity, and employment stability, to give you informed options. Steps Involved in Refinancing and Potential Cost Savings : We are here from the beginning to the end and strive to simplify the refinancing process for you. We'll help you evaluate your financial situation, research and compare over thirty lenders and loan options, and gather the necessary documentation. Our ultimate goal is to help you secure better terms, rates, and long-term cost savings to ease the pressure on you and your family. In Summary In these challenging times, exploring refinancing options can provide much-needed relief and open up financial opportunities for you as a homeowner. What should I do next? Our dedicated team is committed to nurturing your financial well-being and helping you achieve a stronger and more secure future. Call our office on (03) 8657 8664 to organise a time to chat, and we also invite you to take advantage of our free resources by heading to our website. https://www.futurefinancegroup.com.au/
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