Can I afford to buy a home?

By the resi financial blog team, 20 August 2013

Understaning your borrowing capacity

Part of living the Australian dream is to one day own our very own home. However, in order to turn this dream into a reality, we need the housing finance to begin with!

Before purchasing a home for the first - or second - time, it’s important that you determine whether or not you can afford it.

While current fixed interest rates in Australia are at a good level, the opportunity for many to enter into the property market is looking more attractive. And it’s times such as this that people can easily make a rash decision about their finances in order to secure a good property deal.

Seek advice

In order to make sure you are making the correct decision, it may be a good idea to discuss your home loan options with a mortgage lender first.

By doing this you will get access to quality advice, and determine if you can afford to make a move into the property market.

Another point to consider is what type of home loan would suit your circumstances best. A variable rate loan can provide borrowers with a good level of flexibility, however when it comes to making repayments this amount can fluctuate.

It’s important to remember that if interest rates increase in the future it will impact how much you’re paying towards your loan.

Budgeting

If you are considering buying a property in the near future, then you might find it beneficial to draw up a budget. Doing this will allow you to get an idea of where your money is going, and the types of financial commitments that you are currently tied to.

There are also useful online calculator tools you can use to determine your borrowing power and loan repayments.

From here, you can aim to set aside this monthly repayment amount as a trial so that you can see if you are able to afford to take on a mortgage or not.

Categories: Home Loans