How much will the bank lend me?
When you finally reach the approval stage of your home loan application, you will be told what your borrowing capacity is. This is the maximum amount of money a bank will lend you.
To work out your borrowing capacity, lenders will look at three key areas. Here’s a brief rundown on each:
How much money will the banks lend me, below are the four key requirements the banks look at.
- INCOME
How much money the home loan applicants earn on a regular basis is the most important factor. If you’re in a PAYG role then you’ll need to have been in it for at least six months. If you’re self employed, there’s a few extra steps you’ll need to take to verify your earnings.
- REGULAR DEBTS
Everyone has different living expenses and demands. Cutting out home delivery meals, take-away coffees and expensive haircuts is a good idea in the lead up to your loan application. With fewer expenses, lenders will have greater confidence that you can cover your repayments.
If you have any debts, pay them off now!
- DEPENDANTS
Lenders need to know that your repayments won’t inhibit you from financially being able to support those that need you. Be realistic about your family’s living costs and map them out so you know how much you can afford each month.
READY FOR THE NEXT STEP?
Everyone’s circumstances are different so it’s really important to have a good mortgage broker to guide you through your home loan application. They may pick up on something that you’ve missed and this could be the difference between securing that dream apartment or settling for something second-rate.
What are non-genuine savings?
For some people, saving for a home loan deposit is long and arduous.
Years of sacrifice and two-minute noodles are followed by an approximate three month wait, whilst you prove to your lender that you are capable of budgeting and making mortgage repayments.
This is known as GENUINE savings and is how many people start their property journey.
But this isn’t always how life works. You may have different circumstances in which you’ve come into money quickly. This can be from an inheritance, a gift, sales of assets or most commonly, a little help from mum and dad.
How much will the bank lend me? We can include non-genuine savings too.
These are known as NON-GENUINE SAVINGS and are perfectly acceptable.
All you have to do is let your broker know your situation and make sure you choose ‘non-genuine savings’ when you’re comparing different home loans.
Keep in mind, you will have added costs to consider.
These include:
- Building inspections
- Loan application or establishment fee
- Mortgage insurance
- Mortgage registration & transfer fees
- Conveyancing & legal fees
- Stamp duty
If you want an indication on what these fees are and how much to allow for in your budget, contact us.