When purchasing a property, it is advisable to look carefully at your budget, not to overextend yourself financially, and to get your priorities right. Here are some tips on how to achieve this:
Find out what you can afford
Borrowing depends upon income, your credit history and purpose of the loan. Whilst a mortgage broker can assist you with calculations on how you will service the loan, you’ll firstly need to calculate what you have in cash, what you can afford to borrow based on your income stream. Consider the loss of your partner’s income for a year, even your own, and what impact this would have on the family. Never overestimate your capacity to make mortgage repayments.
Mint Equity's mortgage repayments calculator is specifically designed to do these calculations for you, letting you know how much you can feasibly afford to borrow. A mortgage broker not only saves you time and recommends lenders best suited to your individual requirements, but we save you money.
Our mortgage calculators are best viewed on desktops rather than mobile devices as they use Flash. To get the latest version of Flash click here.
Another benefit to utilising the services of a mortgage broker is that they are able to check out available lenders, interest rates, loan terms (especially early repayment terms), and analyse the deals on offer.
In addition to the costs of securing finance for your purchase, you should investigate all other costs associated, including;
- Lenders Mortgage Insurance (LMI)
- Building inspection
- Land survey and reports such as Mine Subsidence
One of the other major costs, depending on where your property is located, is stamp duty and government charges. Our property fees calculator provides you with the estimated costs of mortgage/purchase stamp duty and transfer and registration fees. These costs vary depending on location, whether the property is a home or investment, built or vacant land, or if you are a first home buyer.
Take into account day to day living expenses
Everyone must eat, travel to work, be clothed and cared for, and everyone uses electricity and water. All have to be paid for. Each lender uses a different method on how living expenses are calculated, some add a loading to account for seasonal changes which will increase your expected living expenses and reduce your serviceability calculation.
Once you decide how much savings you have after all expenses and what you can sensibly borrow, you can move on to where you want to live or invest.
While no two lenders have identical terms or requirements, our loan comparison calculator will give you a very good idea of where you stand with the average lender. Always keep in mind that, as with any sort of an application, if yours is clear, accurate and properly supported, it is more likely to have a favourable outcome.
The lender of your home loan will, naturally, want to make sure that you can actually pay for it, now and well into the future. The first thing that they will look at is the work history of the individual or individuals looking to borrow. If you have steady employment, this is ideal as it shows that you are less of a risk. Of course, having a job shows that you have the money coming in to pay off the home mortgage.
The credit score of home owners is also very important. If you are a new homeowner, you should ensure that your credit score is high. To learn more about how your credit score can affect your application, read our article Home loans and credit scores - are you paying more because of your credit score?.
Take a look at our range of mortgage calculators to help you in your initial research stages.