Q: What are ways to calculate how much can I borrow?
A:
- Use a borrowing power calculator
One of the easiest ways to calculate how much you can borrow for a home loan is to use a borrowing power calculator. These calculators take into account your income, expenses, and other factors to give you an estimate of how much you can borrow.
To use a borrowing power calculator, you’ll need to enter your income, expenses, and any other debts or financial commitments you have. The calculator will then give you an estimate of how much you can borrow based on these factors.
- Consider your deposit
The amount of deposit you have will also affect how much you can borrow for a home loan. Generally, the more deposit you have, the more you’ll be able to borrow.
In Australia, most lenders require a minimum deposit of 5% to 20% of the property value. If you have a larger deposit, you may be able to borrow more, as this reduces the lender’s risk.
- Look at your credit history
Your credit history will also play a role in how much you can borrow for a home loan. Lenders will look at your credit score and credit history to determine how reliable you are at repaying debts.
If you have a good credit score and a clean credit history, you may be able to borrow more than someone with a poor credit score.
- Consider your income and expenses
Your income and expenses will also be taken into account when calculating how much you can borrow for a home loan. Lenders will look at your income to ensure you can afford the repayments, and your expenses to ensure you have enough money left over to cover your living expenses.
If you have a high income and low expenses, you may be able to borrow more than someone with a lower income and higher expenses.
