Determine your borrowing capacity

How much will my mortgage repayments be and how much can I borrow to buy my first home? These are a couple of common questions first time home buyers have. These handy checklists below can help you to work out the total cost of your new home and the loan amount you’ll need to secure your first place.

For your first home, total setup costs generally include the following:

• Purchase price of your new apartment

• Stamp duty (tax)

• Property transfer fee

• Mortgage registration fee

• Lenders mortgage insurance (LMI) fees

• Pest / building inspections

• Insurance

• Loan application and settlement fees

• Any other costs

 As a purchaser, the below is generally the total contribution towards your first home:

• Deposit

• First Home Owner Grant

• Any other exemptions or concessions as per your personal situation    (eg. stamp duty)

Having worked out these two dollar figures, generally your loan amount required will be:

Total set up cost – total contribution = loan amount.

This amount will be a rough guide, but remember it’s always best to borrow an amount to best help you plan for any interest rate rises or other unexpected costs. Your lender can also help you look at affordable monthly repayments according to your salary, interest rates, the length of your loan and any additional fees you’ll need to pay.

There are plenty of online tools to help you obtain an estimate of what you can afford to borrow. ASIC’s Money Smart website has plenty of tools and resources including calculators and apps to help you answers your burning money questions. It’s advised you seek the professional advice from a variety of lenders to compare your options and understand your mortgage options.



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