Renting? Find out in 7 Steps What You Can Afford to Borrow
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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.
iConnect Financial mortgage brokers work with a range of well known lenders to find you the right home loan.Fill in your details in the form to the left and a local mortgage broker from iConnect Financial will contact you at a time which suits.You’ll be able to discuss your goals and what home loan you’re looking for, and your iConnect Financial broker will help you select the right loan. They’ll even help you with the paperwork and application process.
Ready to stop renting and start your journey to home ownership? Read these guides
If you need cash for living expenses or medical bills, you can boost your retirement by getting a lump sum payment. In essence, this is a way to borrow money on the value of a home without needing any income, using only the home’s value as security.
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