We are currently looking at a 4 bedroom home in Engadine for $940,000 and have $150,000 to cover deposit, stamp duty and legal fees. My husband’s income is income is $136,000 and I work permanent part time and earn about $67,000. We have 2 kids under 10….. no other debts and would like to know how much we might be able to borrow, thank you?
Anne. Good morning. There are a number of variables that we need to consider, which would need to cover a suitable amount for living expenses, the purpose of the purchase (owner occupied or investment) and the most suitable term for the loan.
There are then two answers to your question. First being the level of income to support the loan. You appear very strong in this case (potentially over one million). The second is the amount of deposit you have to complete the purchase based on the maximum borrowing levels against the security. With $150k however this could also exceed one million, dependant on your appetite to pay a Lenders Mortgage Insurance premium.
I would be happy to make an appointment to work through these figures in more detail and answer all of your questions.
Customers First Mortgages & Insurance.
1300 ASK KEN (275 536)
Thanks for the info,
Are the figures quoted your base income? Does it include any overtime or bonuses?
The reason I ask is that, lender would treat overtime in a different way than base income,
In Theory, you can get up to $864,800 plus mortgage insurance if you like,
Your stamp duty and cost are around $41,000, you will have around $109,000 for the deposit. It will definitely work.
Please let us know if you have any other questions.
There are various online calculators which can help you work out your borrowing capacity & just one that I know of is (https://www.westpac.com.au/personal-banking/home-loans/calculator/mortgage-calculator/).
This will let you play with various different scenarios to see what works best for you.
Regardless of the outcome (ie, you might find you can borrow as much as you need), two tips I'd give include:-
1) If you are looking to borrow more than 80% of the purchase price of the property, you're looking at Mortgage Insurance & that's not cheap, so if you can avoid it, by either borrowing less (maybe you wait 6mths & save more? / extended settlement, etc) or if you have some other additional security you can offer your financier to get below 80%, it would save you plenty, as it's dead money.
2) There is a difference between a bank being willing to lend you the money & you being able to sleep at night knowing you all of a sudden you have gone from no debt (I assume) & plenty of disposable cash (again, I assume) to a large mortgage & a large commitment you'll need to meet each month.
It may well be that the rent you're paying now is the same as the loan repayment & if so, that's great, but just make sure your headspace is right when you make the decision, that's all.
On the surface you would be able to purchase the property using the figures that you have provided assuming a number of variables would meet lending guidelines such as your average monthly expenses and the type and length of employment.
As Ken, Michael and Phil have all suggested it is important to understand and consider mortgage lending insurance (approximately $20,000) and also the higher interest rate charged when borrowing above 90% of the value of a property (up to 0.4% higher rate).
Repayments on a loan for $850,000 over 30 years would be around $4100 per month (after taking into account the stamp duty and other costs and Lenders Mortgage insurance you would have $90,000 as a deposit).
I would strongly recommend sitting with a broker who could run through the specifics of your situation and provide a list of possible scenarios and options
If you work on the $ figure from a budget of what you guys are saving per month after accounting for all your after tax income and credit and lifestyle costs, this is the basis on which a bank will look at your affordability.
What is your goal to repay the loan off? 10, 20 or 30 years?
What plans do you have to support the kids in school and high school?
What bonus' do you get?
I have lots of questions 😊
If you want to discuss what the options are in context with your other life and financial goals, we would love to help you at Announcer.
Let me know if you wish to chat.
Hi, probably a bit late now. But this borrowing power calculator that we have is actually back ended by the same technology our own advisers use when we do early analysis of borrowing power for our customers. Compared to what is on the internet on bank and comparison rate websites it is *highly* accurate
Like all calculations it is only as good as the data you put into it and the devil is in the detail here. You would need to provide documents like payslips etc to ensure the inputs are right to get a definitive answer