Pottsville Beach / Cabarita Beach
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What do I need to know before I borrow for a home?

October 4, 2018

What do I need to know before I borrow for a home?

Buying a property is undoubtedly one of the most significant purchases many of us will ever make. So, if you have saved a decent deposit – which covers upfront expenses such as loan application fees, building, and pest inspections, stamp duty, and legals – the following issues are worth some consideration.

  1. The maximum monthly repayment cap – many experts, suggest monthly mortgage repayments should be roughly no more than 30% of your before-tax income. Some lenders are even starting to approve loans based on smaller percentages of before-tax salary.
  2. Current credit card debt – a hefty credit card debt can affect how much you can borrow. Pay off or pay down your plastic cards as much as possible before you front up to a lender.
  3. Do your sums – stress test your mortgage before committing. Calculate whether you will still be able to meet your loan repayments if interest rates go up a couple of percentage points or your earnings are affected by an unforeseen event such as a retrenchment or a divorce.
  4. Be aware of LMI – if you have between 5% and 20% of the purchase price, you may need to pay what’s called Lenders Mortgage Insurance. Paying this insurance impost enables a bank or credit union to lend you a greater percentage of the purchase price. LMI Can be paid upfront or is added to your loan repayments. This spreads this expense over the term of the loan.

To help you with your mortgage sums and to choose the right home loan, contact Our Broker today on 1800 913 677.