How much money will the bank lend you?

When you finally reach the approval stage of your home loan application, you will be told what your borrowing capacity is. This is the maximum amount of money a bank will lend you.

To work out your borrowing capacity, lenders will look at three key areas. Here’s a brief rundown on each:

1. INCOME

How much money the home loan applicants earn on a regular basis is the most important factor. If you’re in a PAYG role then you’ll need to have been in it for at least six months. If you’re self employed, there’s a few extra steps you’ll need to take to verify your earnings.

2. REGULAR DEBTS

Everyone has different living expenses and demands. Cutting out home delivery meals, take-away coffees and expensive haircuts is a good idea in the lead up to your loan application. With fewer expenses, lenders will have greater confidence that you can cover your repayments.
If you have any debts, pay them off now!

3. DEPENDANTS

Lenders need to know that your repayments won’t inhibit you from financially being able to support those that need you. Be realistic about your family’s living costs and map them out so you know how much you can afford each month.

READY FOR THE NEXT STEP?

Everyone’s circumstances are different so it’s really important to have a good mortgage broker to guide you through your home loan application. They may pick up on something that you’ve missed and this could be the difference between securing that dream apartment or settling for something second-rate.