The first step towards home ownership
involves a little introspection. You need to take a long, hard look
at yourself and determine what you are planning in the years ahead
and how much you can afford to repay.
There's a handy Income and Expenditure Calculator on the Your Mortgage
website
(www.yourmortgage.com.au)
that can tell you what you can afford, but if you don't have access to the internet,
the calculations are pretty simple.
Begin with your total monthly income. Use the after-tax income of both you and
your spouse (if applicable), regular income you get from term deposits, cash
management accounts, share dividend or property investment. This becomes your
total monthly income.
The next step is to determine your monthly expenditure. This is a little trickier
than determining your income, because your cash is likely to go towards a number
of different places over the course of a month. Obvious categories of expenditure
include food, clothing, electricity, phone, gas, medical, insurance, entertainment,
personal, car, transport, childcare, credit cards - the list goes on. Don't include
your current rent if you are purchasing a home to live in, if things go well,
you won't have to pay rent for much longer.
Subtract your total monthly expenses from your total monthly income and (hopefully)
you will have a healthy positive number that is roughly what you can afford to
repay each month on a loan. Now if the figure you arrive at is suspiciously high,
look carefully at your expenses. If the figure suggests you can save $2,000 a
month, and you've only ever been able to save $1,000 then clearly you've left
a few expenses out. People are creatures of habit - if you haven't saved before,
you're going to find it difficult to save now. Be honest with yourself from the
outset. There are no prizes for having the biggest house and then not being able
to afford to live in it.
With the numbers under control, you also need to consider more abstract thoughts,
such as where you think your career is headed financially, whether you or your
spouse are considering raising a family and what impact this might have on your
ability to service your loan.
Now that you know the total amount you can devote to mortgage repayments each
month, you can determine roughly how much you will be able to borrow. This amount
will vary from lender to lender, and many now have handy calculators on their
web sits that allow you to determine the amount of money they are prepared to
part with. There is also an affordability calculator on the Your Mortgage web
site that calculates a very conservative estimate of the amount you will be able
to borrow and the costs you will face depending on the State you are purchasing
in.
|
| Our Comments |
|
| As an independent mortgage broker we are kept
abreast of both the lending criteria and the maximum lending
calculations used by the banks. These calculations, which vary
from one lending institution to another, are the method used
when working out if they will firstly lend to you and secondly
how much they will lend to you. As we deal with a most of the
major lending institutions across Australia we are able to calculate
the specific maximum loan amount from the lender of your choice. |
|
|
