How much can I borrow?

By June 26, 2018 No Comments

When you’re thinking about buying a new property, one of the first questions that springs to mind is How much can I borrow from the bank?. It’s a great question as it helps you understand your budget so you can begin that all-important property search. But from our perspective, there’s another question that is even more important to ask.

Answering the ‘How much can I borrow?’ question

Let’s get that one out of the way firs, as we’re sure you still really want to know the answer! To do that, head on over to our Smart Loan Calculator and answer a few simple queries. You’ll then get a quick estimate of your borrowing capacity, plus a rundown of interest rates and repayment figures.

The RIGHT question – how much should I borrow?

Banks are now starting to tighten their lending terms due to a proliferation of home buyers who have found themselves in the ‘overextended’ category. People who foolishly loaned to their maximum capacity, putting themselves under so much financial stress that they couldn’t enjoy the beautiful property they purchased!

You don’t have to be in this boat. Working out how much you should borrow all comes down to one thing – understanding your cash flow.

Your cash flow

Get out your bank statements and review your finances over a certain period. Look at all your incomings and outgoings over this time so you are fully aware of the figures.

Once you’re clear on the numbers, think about how much you REALLY need to live comfortably. Also consider any big changes in your life that might impact your repayment ability plus, what would happen if interest rates suddenly went up. Finally, think about a backup plan if you can’t make a repayment or two (ie do you have any ‘rainy day’ money savings?).

This review session will help you work out the right loan amount – how much you can comfortably afford to repay each month, without sacrificing the life you want to live.

Still stuck?

We understand determining the right loan amount can be tricky. If you’ve gone through the above exercise but are still left scratching your head, let us know. We have all the right tools to help you work out the correct loan amount to suit your situation.