If you’re already in the process of hunting down a mortgage broker, you probably have your heart set on an important property purchase. there’s a few things out of our control [but not necessarily yours] that will affect the amount you can borrow and, ultimately, the amount you will have to finance your dream.
How much can I borrow is not the question to ask your mortgage broker
It’s the first question most people ask, but hold up a moment before you reach for the phone and your mortgage broker. There’s a lot you can do to determine how much this will be for yourself. You can never entirely game the system to the extent that you’ll known 100% what each lender will offer you, but there is a lot of information available for you to get a good idea.
Firstly, start by taking a reality check. Spend some time with a good mortgage calculator to get an realistic idea, based on your income and expenditure, what you might be able to afford.
How do lender calculate what I can afford?
Ask any mortgage broker, a lender will start by considering your income stream and how secure your employment is. This is why the scales are always slightly tipped against a self-employed individuals, unfair as it can sometimes be. Remember that if you are buying in tandem with another person, be it a spouse or just a secondary individual, your repayment capacity will be higher than individually. However, don’t opt to join up with someone with a poor credit rating, or your borrowing capacity will be reduced too.
They will start with existing debts and lines of credit- cars, credit cards etc. They will also look at how well these credit lines have been tended, so for the 3-6 month period before you begin looking, and be careful to make all payments on time so that this section of your credit report looks as good as possible.
Mortgage brokers in the know caution that credit card limits play a big part of this. Remember it will be combined across all cards, store cards and more.
How extravagant are you?
Ok, we exaggerated slightly– but they will pay attention to your living expenses and how much it takes to maintain your lifestyle monthly. It’s sound practice- many people tell themselves they will cut back exorbitant living to make the loan repayments, then fail to do so and fail to repay loans.
Do you have a deposit?
If you are putting down a property deposit, your mortgage broker will tell you that you will have an easier time obtaining credit. The larger the better. Likewise, the property you want to buy will become part of the deal. If the lender doesn’t think your property is worth the amount you’re willing to pay, they are not likely to give it to you. The loan type will also affect how willing to give you the amount they are.
Your mortgage broker will be able to help you through the sometimes complicated process of figuring out how much you can borrow, so work closely with them.
CHeck out this post for more informations: http://www.atlantahomesbysusan.com/what-does-mortgage-brokers-melbourne-do/