Before the big house hunt it is most important to find out exactly how much money you can borrow. Doing your sums up-front will give you a better idea of the price range and area you can afford, ensuring you do not waste time on properties that could be out of your price range.
With the market being very brisk at present, the last thing you want to do is put an offer in on a property get acceptance , and then spend 5 days or more getting finance approved. The agent will just simply put the property back on the market and sell it to someone else ,or another offer will come in above yours and you will have to pay more.
The amount you can borrow depends on a number of factors such as interest rates, the term of the loan ,your income and financial commitments.
In general, however, home loan finance is calculated as a percentage of the property's value.
The majority of the larger banks generally lend up to 80 percent of the property's value and can also finance up to 95 percent subject to lenders mortgage insurance.
This means if you need a loan for $200,000, for example you may only need to contribute as little as $10,000 towards the purchase price.
Your income is one of the main criteria used to determine how much you can borrow.
I like using brokers myself but I do find when a broker has given you a cracking rate you can take that into the same bank and they will undercut the broker because they are not having to pay broker commissions. Also with the broker they will do a lot of running around to all the banks and get you the best deal available at the time.
If you are buying a home together with your spouse or partner, your joint earnings will be assessed, including income from any other sources such as investments or second jobs.
On the other hand, the lender will take into consideration any other financial commitments you may have, such as personal loans or credit card debts.
As a general rule, the total monthly repayment for a home loan added to your other financial commitments should not be more than 30percent of your gross monthly income.
So rule number 1 get your home loan approved and should you need to use a deposit bond make sure that is also organized.