Before the big house hunt it is most important to get a good indication of how much you will be able to 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.
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.
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 30 percent of your gross monthly income. Mortgage brokers will come to you and offer a number of different lenders for you to choose from.