Buying a Home
How much can I afford?
How much you can afford to borrow towards your new home will depend on a number of factors. These include:
- How much do you earn?
- What is the income of the people that you may be buying the property with?
- How much do you spend each month on other commitments such as loans or even travel expenses?
- What are your current assets and liabilities?
Our home loan repayment calculator will assist you in calculating your borrowing power based on your estimated loan amount and different interest rates in case interest rates rise.
Don't forget stamp duty may apply when you buy your new home. Our stamp duty calculator can help you with your calculations.
We have created some helpful checklists that you can print out and refer to during the budgeting process and help shed some light on all associated costs. You should also consider talking to an independent financial adviser or your accountant about your intention to buy a property.
Mortgage budgeting
The first step in getting a mortgage is to do a budget, so you get a clear picture of where you stand financially. This will give you a feel for how much you can afford in mortgage repayments. You need to work out your income and expenses, and determine the value of your assets and liabilities.
Get a copy of a mortgage budget check list
Income & expenses
Begin by calculating the total income for you and your co-purchaser (if applicable). This includes how much you are paid monthly, plus any other income such as rent or investment income. Then list all your monthly expenses.
Here are handy income checklist and expenses checklist to help you work out your budget.
Assets & liabilities
Calculate the value of your liabilities and income as they will impact on the bank's decision as to how much it will lend you as a mortgage. The value of assets may also impact their decision.
Get a copy of the handy assets and liabilities checklist to help you work out your budget.
Costs in buying property
For many people purchasing a house or investment property, the deposit is the main cost considered. There are also a number of add-on costs you need to consider. In
addition to a deposit, you will pay stamp duty
and mortgage duty based on the value of the property
and the state you live in. Find out more about stamp duty rates and mortgage duty rates.
Other costs you will need to factor in include:
- legal fees
- property inspections (e.g. building, pest, strata, land/property survey) which may be in the total order of $2,000 to $3,500 (costs will vary depending on your individual circumstances).
- Lenders Mortgage Insurance (this is needed if you are borrowing 80% or more of the valuation of the property).
Deposit when taking out a mortgage
When buying a house, some banks or mortgage lenders will accept a deposit on a mortgage of less than 10 percent (for example, a three percent deposit), and some will provide a no deposit home loan, depending upon the location and price of the property. However, sometimes a deposit of less than 10 percent may mean additional mortgage insurance is required.
When buying investment property, many people will leverage on the equity in their home. This
means that the bank may lend you 100 percent of the home loan amount, as it will have your home as
security.
Mortgage repayment calculators
Now that you've worked out how much spare cash you have on a monthly basis, you have an idea of how much you can afford in mortgage repayments. What you can borrow will be based on things such as your income, number of dependants and how much money you have to put towards the purchase of your property.
Our handy mortgage borrowing power calculator will give you a rough guide as to how much you can borrow.
Don't forget to find out your stamp duty rate and mortgage duty rate, as these amounts will reduce the amount you can spend on buying a house. The rates vary from state to state.
Our handy stamp duty calculator will help you calculate your stamp duty.
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