What can you afford to buy?
Generally a First Home Buyer will ask – How much can I borrow ? However it is more important to be realistic with your budget and ask the question – How much can I afford?
Lenders will evaluate your borrowing power based on your income, your expenditure and your proven history to save and the size of your deposit. There can be a difference between what you can afford and what your credit limit will be.
Lending criteria will vary from lender to lender based on each finance institution’s lending policies. Your ACA Mortgage Broker has a comprehensive understanding of each of our 40 + lenders and their policies and will be able to recommend the right loan product to suit your unique circumstances.
Calculating your borrowing power.
1. Rule of thumb
Based on your income your mortgage repayments should not exceed 35% of your gross income (i.e before tax)
2. Draw up a house hold budget
Don’t try to guess, as this will not leave you with any buffer for unexpected expenditure.
Layout all your bills and expenditure for the last 12 months and take a monthly average calculation.
Your Budget should cover: Total Income, Home Expenses, Living Expenses, Vehicle and Transport, Debt Repayments, Lifestyle and Entertainment, Insurance and Superannuation.
We have conveniently included a budget planner to help you with your mortgage calculator calculations below.
Armed with your budget you can now calculate how much you can borrow using our mortgage calculator. The total mortgage amount will dictate your monthly repayments. A larger deposit will reduce your repayments and may may reduce or eliminate fees like Lenders Mortgage Insurance.