Affordability is just as important tomorrow as it is today.
When considering a mortgage there are many affordability considerations about your future that are quite often ignored. They are crucial to your ongoing lifestyle or at worst, keeping your home. We don’t like to think about a lot of these things:
- Is your income going to stay the same? Is you or your partner going to stop working or reduce their income? What if you lost your job(s)?
- Are your expenses going to stay the same? Going to renovate or furnish your new home? Interest free sales?
- What about interest rates? What if they go up? What if they go up a lot?
- What if something happens to you or your partner?
You can structure your mortgage to provide buffers to help shield against the unforeseen events. We have a variety of techniques such as loan splitting, interest only and fixed rates that can be quite advantages when used in the right combination.
How is it calculated
Every lender looks at affordability differently (serviceability in bank-speak). This means that each lender will be prepared to lend you different amounts.
A common example is called benchmarking. Benchmarking is the buffered interest rate at which a lender uses to calculate your affordability. Lender A might use the Standard Variable rate plus 2%, Lender B might allow for a lower rate on a packaged loan that has a 0.7% discount involved.
This is where is starts getting complicated and where it really helps to be dealing with a mortgage broker.
Can you tell me what I can borrow?
Absolutely, simply contact us using any of the details at the bottom of this page.
Affordability forms part of the lenders decision making process around how much you can borrow when reviewing your application.