Getting your finances in order
What is my borrowing power?
The amount you can borrow - commonly known as borrowing power or borrowing capacity - will differ from lender to lender. Your borrowing power is measured based on your complete financial situation, taking into account:
- Expenses including credit cards, personal loans, rent and any other outstanding balances.
- Income streams such as salary, investment properties and government assistance.
After considering the above, your lender will be able to confirm how much they would lend you.
How much deposit do I need?
The deposit required depends largely on the type of home loan and the lender you select. As a general rule if you are an owner occupied purchaser you will need between 5-10% of the purchase price as a deposit. If you are an investor, generally you will require 10% of the purchase price.
You can use a combination of genuine savings for the past three months and contributions from other avenues such as bonuses, gifts or family assistance.
How do I save for my deposit?
Budget, budget, budget! Set yourself a realistic savings plan and put away a little bit of money each pay cheque. It would be a good idea to do some research on property prices in the areas you are interested in to work out how much you need to save before seriously looking to make a purchase.
How often can I make my repayments?
Most lenders these days will allow you to pay your mortgage fortnightly or monthly (and on occasions weekly) to suit your pay cycle.
How do I make my repayments? The method of paying your mortgage will differ from lender to lender - most people find the easiest repayment method is direct debit set up to automatically be transferred each fortnight/month as agreed.