How much can I borrow?
There are many different factors that the lender will consider when calculating the maximum mortgage they will offer you. The three major ones are as follows:
- Affordability takes into consideration your income and expenses to determine the amount of money left over to service the new mortgage.
- Equity takes into account how much deposit and savings you are putting towards the purchase of the property. The lender will consider the Loan to Value ratio (LVR) which a measure of risk (the more they lend you as a percentage of the purchase price, the harder it would be to recover that money on default).
- Credit History will also be taken into account. Your credit record will contain any negative credit issues such as overdue accounts, defaults or clearouts. To view your credit record go to mycreditfile.com.au.We recommend doing this unless you are positive there is nothing negative in there. The lender will run this check and it is better to explain anything negative pro-actively rather than re-actively.