1 How much can you afford?
How much can you afford to spend on your first home both in the initial purchase price and servicing the ongoing cashflow commitments?
This step involves taking another further two steps…
Having a budget
You should take the time to do a budget to establish just how much you can afford to pay in owing your own home. It is important to factor in the running costs like rates, water and insurance etc, and not just the cost of servicing the mortgage. You will need to make sure there is enough left over for the essentials like food in the fridge and the cost of everyday life.
To help you in this process First National Assist has provided you with a budgeting calculator. All you need to do is client on the Client login at the top of the page to access all of your property tools. Or simply click here to login now.
How much can you borrow from a bank
Unless you have won lotto or have wealthy family members that are willing to help us pay cash for our first home, then we are going to need to go to a bank and borrow money for our first home .
Bank have certain criteria to establish just how much they will lend you. They base the amount on two different criteria:
Firstly– how much deposit/equity or security you can offer. (This is what a banks call LVR – Loan to Value ratio.)
Secondly– you ability to repay the loan. Banks call this DS or Debt servicing Ratio. (Basically, how much money are you making and how much is left to pay the bank back.)
There are many options to help you purchase you first home. There are grants available to help you with your deposit and there are always your trusted family members to help you with a deposit.