Your Borrowing Capacity
Interest rates are falling and many potential home owners are looking to see how much they could borrow to get on the property ladder. 
Customers looking to finance a property first need to know how much they can borrow, to enable security and confidence when looking at the Melbourne property market.
Taking on a mortgage is a great responsibility and can bring people a lot of joy, but also a lot of trouble, if not managed properly. Finding out your true borrowing capacity will enable you to act more confidently at auctions, and allow you to gauge an idea of how much you will need to spend on getting that dream home.
To find out your borrowing capacity, talk to a local Melbourne mortgage broker. When you apply to a lender, they will want to know your financial history:
- Your income - this includes your salary or wages, along with any other income you receive
- Your expenses and outgoings – this may include personal debt repayments such as credit cards or car loans, as well as any other financial commitments you may have
- Estimated repayments, i.e. the amount that you could afford to repay each month
- Assets or liabilities, this may be other investments
Do you have a deposit saved, or are you looking to borrow 100% of the property price? There are many great no-deposit home loans on the market, and these can be beneficial to borrowers who want to buy a property now, but haven’t got enough saved for the traditional 10% to 20% deposit. You can look at borrowing the full purchase amount as a way of getting a home at a time when interest rates are low and prices are good. However, be aware that there may be added fees and charges to pay, such as Lenders Mortgage Insurance (LMI) when taking out a 100% home loan.
Borrowers need to be aware of how much they can afford to repay, and unless you are opting for a fixed rate loan, you should also consider accounting for a marginal interest rate rise in your budget. Repayments should not exceed 35 per cent of your weekly pre-tax income (or 30% of your combined income for joint borrowers). Spending some time on your budgets now, will save you worry in the future, and can help you to determine whether or not you can pay a little more than the minimum repayments in order to save on interest.
Owning your own home is the great Australian dream, and whether you are looking to finance your first home, a second home or an investment home, knowing how much you can borrow to fund the property is an important first step. Our Local Melbourne Mortgage Brokers listen to your personal circumstances and help you to budget accordingly, so that dream home can be yours quicker. Call us on  or submit your enquiry via our on-line submission form.
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More in this Section | For further information and help with your personal mortgage | Applying for a home loan can be exciting and confusing | Paying off your home loan faste | Why use a Melbourne Mortgage Broker |
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