Borrowing within your means on your property purchase

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The key to buying a property in any market is to ensure that you have pre-approval, the funds available to purchase with all additional costs and that you can feasibly service the loan repayments at the current rate and subsequent increases.

Purchasing a property is one of the biggest investments that you can make in your life and to avoid potential future stress points, it is crucial to borrow an amount that is within your means and at repayments that are comfortable for your budget.

Interest rates will change, as will property markets and waiting for them to decrease may mean missing a property that you fall in love with. Choosing a property that you can afford now can mean getting into a home sooner.

Assess your capacity

When approaching any debt, it helps to look at it with a healthy and realistic mindset. A lender has a responsibility to assess your affordability based on your circumstances and will use a guide on how much they will lend.

You will have a choice over how much you eventually borrow based on what they set as your pre-approval. Look at the monthly repayments on the loan and determine if they are affordable for your needs. If they are not, consider scaling back your property price buying expectations and only borrow what you can afford.

Interest rates may rise

Banks will increase interest rates in line with market and inflationary changes and when considering how much to borrow, take this into account. While rates will rise, your property purchase will also have the potential to gain equity. 

When setting up your first mortgage talk to your lender about the options for you to lock in the best possible rate. Also remember that you will have ongoing property running costs like council and water rates, strata levies and other utility costs in addition to repairs and maintenance.

Plan for the future

Think about what the future may hold for your property plans. You may decide to stay in the property long term, it may be a stepping stone or an addition to a property portfolio or you may need to sell in the shorter term.

Property purchase is usually a long-term investment in which case there are gains that can be had over time on your investment. Talk with your financial advisor about an investment path that is right for you. 

And if you have that pre-approval and are ready to buy, contact our sales team to get you started.

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