How much can you borrow?

When determining how much you will be able to borrow, lenders look at a number of factors. These are outlined below.

Different lenders will look at this information in varying ways however, and so the amount can vary considerably based upon any specific criteria set by each individual lending institution.

Independent Mortgage Consulting have a variety of lenders, and are able to do these calculations for you in one step, without the need for you to visit each and every bank or lender.

The assessment criteria are as follows:

Your Income
Includes salary or wages, as well as other possible incomes streams such as rental income, share dividends, commissions, and pensions.

Your Commitments
Commitments cover ongoing payments such as personal or car loans, credit cards, or repayments of any other kind.

Living expenses
Most lenders will have set figures for use in their calculations, for how much money you would spend on general living costs. These figures will be dependent upon whether you are single, de facto, or married, and whether or not you have children. These figures will vary between differnt lenders.

It is also important for your own benefit that you have an idea of your actual spending. This will allow you to determine a comfortable level of repayments for yourself.

The Deposit
In most cases it is possible to borrow up to 95% (LVR) of the property value. Therefore it is necessary to have a deposit of at least 5% of the purchase price, plus enough funds to cover costs such as stamp duties, legal costs, and fees. In a few specific circumstances, it is possible to borrow over 95% of the purchase price; check with a loans consultant for more information. For an outline of possible costs associated with your loan, click here.

Your Property
The value of the property will directly effect your borrowing potential. This value is determined by the lender, and may not be the actual purchase price of the property. The borrowing potential is limited by the maximum allowable Loan-to-Value Ratio, or LVR. Independent Mortgage Consulting will be able to determine what your maximum LVR is.

Your credit history
Your credit history is your history of repaying loans and credit cards, and payment of bills such as phone or electricity. It will always be checked when applying for a loan.

For those with an imperfect credit history, there are still a great number of options with which we can help.

The loan type, loan term, and interest rate
All these factors will have a bearing on what the actual minimum repayments will be, and therefore what the lenders calculate you will be able to afford.

For example, an interest only loan will lower the repayments, but you will not be paying of any of the principal. A longer term on the loan will also lower repayments, however in the long run you may end up paying more interest overall than a shorter term. And of course, the higher the interest rate, the more your repayments will be.

An Independent Mortgage Consulting broker will be able to aid with these decisions to find a lender and a product most suitable to your goals. To fill out an enquiry form, just click here.