One of the first questions I get asked by clients when they are buying a property is ‘How much can I borrow?”. My immediate question back is ‘How much can you save?”.
Alarmingly… most clients have no idea.
When we look at buying properties for clients before we can find out how much the bank will lend us we need to find out what they can afford. This will determine how much you can borrow… not the banks. Yes, I know it is important to find out how much they will give you but it is irrelevant if you can’t afford it.
We also need to determine what your buffer levels are. This means how much would interest rates have to rise before it places a strain on your finances. This has been witnessed in Australia and as our interest rates continue to rise it will become a major problem for many home-owners.
After your savings, next is decide whether it is an investment property or a home. This can significantly change your capacity, your monthly loan commitments and your tax position.
Once you have ticked off the above questions, then we can engage the banks and find out if they will lend you the amount your require.
There are many factors that can influence your borrowing capacity including credit cards, income type, debt history etc. If you want a review, please feel free to click on the chat box on the right.