Factor rental expenses into your borrowing power
Estimating your borrowing limits and mortgage repayments can help you make more informed decisions when selecting your home loan.
By taking into account your current rent, cash surplus, discretionary spending as well as the details of your loan including the loan term, interest rate and payment frequency, you can work out the amount that you can afford to borrow when taking out a mortgage.
In addition, you can discover the indicative amount of your monthly repayments, total interest payable on the loan as well as the deposit required. This can help you manage your cashflow and better understand your financial needs when choosing your home loan.
New to home loans? Here's how to use the calculator
- Current rent - Type in the amount of rent you currently pay each week, fortnight, month or year.
- Cash surplus - The leftover cash after rent, essential items and discretionary spending.
- Discretionary spending - This is the amount of cash you're spending on non-essentials such as holidays, luxury items.
- Term - This is the term of the loan you'd be applying for. On average in Australia this is 25 or 30 years.
- Interest rate - The interest rate of the home loan you're interested in. For up to date rates, scroll down.
- Payment frequency - How often you plan to make repayments.
Reece's home buying hunt
Reece pays $180 weekly rent at his apartment in Clovelly, Sydney, NSW. With a cash surplus of $350 and discounted spending of $100 each week, he is hoping to take out a mortgage to finance the purchase of his first home.
After comparing several home loans, and consulting a mortgage broker, he has selected a loan with inclusive features and a competitive rate that suits his needs. With a total loan life of 30 years at 5.5% interest, Reece has opted for a monthly repayment frequency.
In this scenario, Reece would be able to borrow $480 812, with monthly repayments of $2 730.00 and total interest payable of $501 987.59 over the life of the loan. With a required 10% deposit, he would be required to put down a total of $48 081 to secure this loan package.
Not sure on what interest rate to type in? Compare home loans below
The next step once you've found out how much you can borrow is to compare the loans that are in the market. Below is a comparison table which lists some of the competitive loans being offered.
Ready to stop renting and start your journey to home ownership? Read these guides
- Tips for first home buyers - Learn some common sense tips before you start looking for your first home
- Should you buy a home or an investment first? We spoke to Ben Kingsley, CEO of Empower Wealth about how he would answer this question, as well as debunking some myths about renting
- The expert guide for first home buyers - Property Expert Chris Gray gives his top tips for those looking to purchase their first home