When lending to buy a house, the amount of credit that the lender is willing to offer depends on the down payment ratio, income and expenditure of the borrower. The amount of credit the bank is willing to offer is not necessarily the same as the amount that the borrower can afford.
Here are some factors to consider before you apply for a loan in Australia.
Calculate the amount of loans you can afford
In order to work out the amount of loans you can afford, the first step is to make a budget. Record monthly income and expenditure. This allows you to know your monthly expenditure and the amount you can use to repay your loan.
In the budget, there should be room to cope with sudden events and interest rate changes. In calculating borrowing capacity, consider your income, expenditure, personal debt and appropriate loan type.
Here are a few considerations:
- Income: generally speaking, repayment should not exceed 35% of total income.
- Expenditure: to develop a list of current and future expenditures, including the impact of sudden events such as childbirth or unemployment, rising or falling interest rates on the economy.
- Loan: the amount of the loan will directly determine the monthly repayment amount of the borrower, so be careful to be more than you can afford. The larger the proportion of down payments, the less the amount of repayment. Use the mortgage calculator to calculate the monthly repayment amount.
Make sure you meet the loan criteria
Australian banks' lending standards vary widely, depending on the economic situation and size of banks.
The basic terms of the loan are as follows:
- The minimum down payment is calculated as a ratio of (LVR), the ratio of the loan amount to the market value of the property.
- Employment status and current income.
- Previous credit card quotas and personal debt.
- A personal bank record of running water or any previous repayment of any other loan (such as a car loan).
Subject to these conditions, the lender will offer a suitable loan quota proposal, and the borrower will then measure whether his current income and living conditions can be borne by the borrower.
Don't forget the loan charges.
At present, there are many different kinds of housing loan products in Australia, including service charge, mortgage insurance and other special service fees.
- Service charge: at the same time, each organization will charge a different level of service charge. The borrower should consult a legal adviser or registrar to check the loan contract in detail to see what is standard and which is unnecessary.
- Mortgage insurance: a fee charged by a financial lender when a down payment is less than 20% of the purchase price of a property.
- Special service charge: special services included in different loan products will charge a higher fee or use a floating rate. For example, hedge accounts charge more than standard home loans.
- Other expenses: when applying for a home loan, you need to keep a certain amount of money to cover transfer fees, family property insurance, and stamp duty, which should be taken into account from the outset.
Consulting Housing Mortgage Professionals
How much the bank is willing to lend depends on the individual financial condition of the borrower.
Financial advisers can assess the impact of home loans on the overall economy of Australian property buyers, and home loan brokers can help buyers find the most suitable mortgage products.
