Personal
What Can You Afford?
Before you start searching for your new home it is important that you work out how much you can afford. There are a number of factors to consider when you do this:
- How much deposit/equity can you provide?
- How much will a financial institution allow you to borrow?
- How much do you want to repay per month?
How much deposit/equity can you provide?
You need to determine how much you have in current savings that you can make available to pay for the purchase. Some of these funds are likely to be required as an up-front deposit. This varies depending on which state you live in, but may be as much as 10% of the purchase price. If you are contributing more than the deposit amount, the balance of funds will need to be available at settlement.
You need to make sure that any funds tied up in fixed term deposits or other investments can be accessed prior to settlement.
Don’t forget to make allowance for any debts you may need to pay prior to settlement of your loan (eg. credit cards, school fees, etc.).
You are also likely to want some spare funds after you move into your new house for furnishings and other household goods, so it is a good idea to make allowance for this.
How much will a financial institution allow you to borrow?
The amount you can borrow is determined by the value of the property you are wanting to purchase, and your financial circumstances.
Most institutions will only lend you up to 90% of the value of the property you are offering as security, but The Rock will lend up to 95% and in some circumstances 97% of the property's value.
When considering your financial circumstances The Rock will look primarily at your capacity to meet the monthly loan repayments. This means looking at your net monthly income, i.e. after allowing for tax, other loan commitments, and general living expenses, and making sure you have enough left over to comfortably meet the loan repayments. In making this assessment we also consider whether you could still meet the repayments if there was a rise in interest rates of 1.5% per annum.
Click Here to obtain an indication of what The Rock may be prepared to lend you.
How much do you want to repay per month?
Regardless of how much we may be prepared to lend you, you need to decide how much you feel comfortable repaying each month. This depends on your lifestyle, and on any possible changes in your circumstances. If you are planning to start a family, want to travel overseas, send your children to private school, these factors need to be taken into account.
The best way to arrive at this amount is to prepare a home budget.
When you have decided how much you want to repay each month you can use our repayment calculator to determine the loan amount this level of repayment will service. This is the amount you want to borrow. Add to this the amount of deposit/equity you are providing and this is the amount you can spend on your new home.
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