Setting your budget
There are two key calculations to make when you’re thinking about buying a new home:
- what you can afford to pay – an upper limit that cannot be exceeded
- what you are prepared to pay – always less than you can afford and possible to shift if want an extra feature in your home
Most banks and mortgage companies provide access to free online calculators that can help you work out what you could be eligible to borrow and calculate your repayments.
While the lender will calculate a maximum loan amount, you should consider what you can realistically afford based on your:
- current income
- financial obligations
- credit history
- current savings
- living expenses
It’s important to consider your circumstances can change and interest rates fluctuate, so many advisors recommended you allocate around one third of your gross income to mortgage repayments.
One-off and other regular costs associated with your mortgage should also be considered. These could include:
On the positive side of the balance sheet, you could also be eligible for special
homeowner grants and financial incentives!